Paying More than Necessary? The Wage Cushion in Germany

Abstract

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Low-wage careers: Are there dead-end firms and dead-end jobs?

“…Wages are right censored at about the contribution assessment ceiling and left censored by the exclusion of individuals with implausible information on wages (see footnote 5). is partly due to the fact that in eastern Germany fewer firms are covered by collective agreements and even if they are covered they less often pay wages above the level stipulated in these agreements than do western German firms (see Görzig et al 2004;Jung and Schnabel 2009). In order to deal with the wage differential between eastern and western Germany, which might bias our results, we calculate the low-wage threshold separately for these two parts of the country.…”

Firms' wage policies: New evidence from linked employer-employee data

“…Therefore, centralised bargaining tends by nature to reduce wage inequalities, whereas decentralisation gives employers more scope to adjust wages to market conditions and to reward perceived skills (OECD, 2004;Bastos, Monteiro and Straum, 2009). Nonetheless, in the context of a regulated labour market, employers can avail themselves of the wage cushion to overcome the restrictions posed by collective agreements to increase the salary rate prescribed by regulation (Cardoso and Portugal, 2005;Jung and Schnabel, 2011).…”

We Want Them All Covered! Collective Bargaining and Firm Heterogeneity: Theory and Evidence from Germany

“…Wage cushions indicate some form of compensation above the collectively bargained wage. While they are directly measured in our data, it is not clear how they emerge: maybe through additional bargaining at the plant-level or by efficiency wagesetting by the firms (Jung and Schnabel, 2011). Another form of plant-level bargaining might occur when works councils exist.…”