What a Difference Trade Makes - Export Activity and the Flexibility of Collective Bargaining Agreements

Publication Type

Working paper

Authors

Heinbach, W. D. / Schröpfer, S.

Year of publication

2007

Series/labeling

Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim

ISBN / ISSN / eISSN

0930-8334

Keywords

Handelsmodell, Tarifautonomie

The prevalence of opening clauses in collective bargaining
agreements may indicate a tendency to a higher decentralised wage
settlement. Increasing competition on international product markets
is assumed to be one reason for wage-setting decentralisation,
whereas theoretical explanations focus currently on the change of
production structure and the impact of exogenous shocks.
Incorporating stylised facts about exporting firms, new trade models
suggest a different way of adjustment to increasing competition
depending on a firm’s nature. While the most productive exporters
expand into new markets, small, less productive non-exporters are
threatened by import competition. Based on the model from Bernard et
al. (2003), we apply the theoretical implications to explain why
decentralisation in bargaining may arise. We examine in a second
step whether small, less productive, non-exporting firms paying low
average wages, possess a higher propensity to use opening clauses
than more productive, large exporters with a high wage level. Based
on IAB Establishment Data covering the German Manufacturing, our
results indicate that firms exporting to EMU countries – but not
exporters in general – have a lower propensity of using opening
clauses than non-exporters. However, inconsistent with theory,
slight evidence suggests a rising propensity with increasing firm
size and increasing wage level.