Indicative and Updated Estimates of the Collective Bargaining Premium in Germany
This study provides updated evidence on the union contract differential in Germany using establishment-wide wage data and two estimation strategies. It provides pairwise estimates of the union differential based on separate samples of collective bargaining leavers and joiners vis-a-vis the corresponding counterfactual groups. We report that average wages increase by 3 to 3.5 percent after entering into a collective agreement and decrease by 3 to 4 percent after abandoning a collective agreement. Excluding establishments that experience mass layoffs does not significantly influence these net findings, although such establishments record wage losses�statistically insignificant for joiners but up to 10 percent in the case of leavers, as compared with the counterfactuals. The backdrop to these new indicative estimates, which are properly conditioned on establishment size and industry affiliation, inter alia, is one of wage stagnation and continuing union decline.