F. CoBExt‎ > ‎

A. List of outputs

Paper 1 – NoExtension.pdf


No Extension without Representation? Evidence from a Natural Experiment in Collective Bargaining

Alexander Hijzen and Pedro S. Martins

Abstract

In many countries, collective bargaining coverage is enhanced by government-issued extensions that widen the reach of collective agreements beyond their signatory parties to all firms and workers in the sector. This paper analyses the causal impact of extensions on employment using a natural experiment in Portugal that resulted in a sharp and unanticipated decline in the extension probability of agreements. Our results, based on a regression discontinuity design, indicate that extensions had a negative impact on employment growth. This effect is concentrated amongst non-affiliated firms, which may reflect the lack of representativeness of employer associations.

 

Paper 2 - UnionReps.pdf

The Microeconomic Impacts of Employee Representatives: Evidence from Membership Thresholds

Pedro S. Martins

Abstract

Employee representatives in firms are a potentially key but not yet studied source of the impact of unions and works councils. Their actions can shape multiple drivers of firm performance, including collective bargaining, strikes, and training. This paper examines the impact of union rep mandates by exploiting legal membership thresholds present in many countries. In the case of Portugal, which we examine here, while firms employing up to 49 union members are required to have one union rep, this increases to two (three) union reps for firms with 50 to 99 (100-199) union members. Drawing on matched employer-employee data on the unionised sector and regression discontinuity methods, we find that a one percentage point increase in the legal union rep/members ratio leads to an increase in firm performance of at least 7%. This result holds across multiple dimensions of firm performance and appears to be driven by increased training. However, we find no effects of union reps on firm-level wages, given the predominance of sectoral collective bargaining.

 

Paper 3 - FrontalAssault.pdf

Frontal assault versus incremental change: A comparison of collective bargaining in Portugal and the Netherlands


Alexander Hijzen, Pedro S. Martins and Jante Parlevliet

Abstract

Collective bargaining has come under renewed scrutiny, especially in Southern European countries, which rely predominantly on sectoral bargaining supported by administrative extensions of collective agreements. Following the global financial crisis, some of these countries have implemented substantial reforms in the context of adjustment programmes, seen by some as a ‘frontal assault’ on collective bargaining. This paper compares the recent top-down reforms in Portugal with the more gradual evolution of the system in the Netherlands. While the Dutch bargaining system shares many of the key features that characterise the Portuguese system, it has shown a much greater ability to adjust to new challenges through concerted social dialogue. This paper shows that the recent reforms in Portugal have brought the system more in line with Dutch practices, including in relation to the degree of flexibility in sectoral collective agreements at the worker and firm levels, the criteria for administrative extensions, and the application of retro- and ultra-activity. However, it remains to be seen to what extent the top-down approach taken in Portugal will change bargaining practices, and importantly, the quality of industrial relations.

 

Paper 4 - BlindEye.pdf

Turning a blind eye? Compliance to minimum wages and employment

Andrea Garnero and Claudio Lucifora

Abstract

We explore the relationship between collective bargaining, minimum wage non-compliance and employment. We develop a model in which firms may choose not to fully comply with mandated minimum wage levels set by industry-wide collective bargaining. We show that when employers internalize the expected costs of non-compliance, the effect on employment levels may be small. Using data from the Italian LFS, we test empirically the effects of non-compliance on employment and find support for a small positive effect on employment levels. We discuss the implication of a “blind eye” attitude towards non-compliance, often used by authorities to safeguard employment levels.

 

Paper 5 - EmployerPower.pdf

Making their own weather? Estimating employer labour-market power and its wage effects

Pedro S. Martins

Abstract

The subdued wage growth observed over the last years in many countries has spurred renewed interest in monopsony views of the labour market. This paper is the first to measure the extent and robustness of employer labour-market power and its wage implications exploiting comprehensive matched employer-employee data. We find average (employment-weighted) Herfindhal indices of 800 to 1,100; and that less than 9% of workers are exposed to concentration levels thought to raise market power concerns. However, these figures can increase significantly with different methodological choices. Finally, when holding worker composition constant and instrumenting concentration, wages are found to be negatively affected by employer concentration, with elasticities of between -1.5% and -3%.

 

Paper 6 - SelfEmploymentHealth.pdf

Effects of self-employment on hospitalizations: instrumental variables analysis of longitudinal social security data

Judite Gonçalves and Pedro S. Martins

Abstract

The growth of novel flexible work formats raises a number of questions about their health effects and public policy implications which can only be addressed with suitable data. We draw on comprehensive longitudinal administrative data to examine the impact of self-employment on hospitalizations. In addition to variation in individual work status over time, we consider variation driven by a number of novel instrumental variables. We focus on an objective outcome (hospital admissions) that is not subject to recall or other biases that may affect previous studies. Our findings, based on a representative sample of over 100,000 individuals followed monthly from 2005 to 2011 in Portugal, suggest that self-employment reduces the likelihood of hospital admission by at least half.

 

Paper 7 - SelfEmploymentFertility.pdf

Is the future of work childless? Self-employment and fertility

Judite Gonçalves and Pedro S. Martins

Abstract

The growth of self-employment and in particular gig work may potentially explain the declining fertility rates observed in many countries. We examine this question drawing on longitudinal data to compare individuals' fertility and parental leave outcomes when self-employed and employees. We study the case of Portugal, which allows us to focus on structural aspects driven by the type of work performed; we control for institutional dimension of fertility as social protection in Portugal does not discriminate between the two types of workers. Our results indicate that there are no statistically significant differences in fertility between employees and the self-employed, both for men and women. These findings may highlight the importance of social protection for the self-employed, at least as far as their fertility is concerned.

 

Paper 8 - SimpleModel.pdf

A simple model of extensions of collective contracts

Jonathan P. Thomas

Abstract

A model of contract extensions is developed, in which wages bargained by a union and an employers' association may be automatically extended to smaller firms in the same industry. In the model, a fringe of labour-intensive firms are always in the market but respond to extensions of higher wages by larger, capital intensive firms, by cutting back on output rather than exiting at a critical wage. This has the advantage that it avoids the counterfactual prediction of some standard models that all firms belong to the employers' association - since they have excluded other firms by selecting a sufficiently high wage. The implications of extensions are derived, and we find that even though the fringe firms remain active, wages are likely to be substantially higher when extensions occur, and moreover joint surplus of firms and workers in the industry is much higher in the extensions case. This comes, however, at the expense of consumer surplus.

 

Paper 9 - WagesGreece.pdf

Changes in the level and structure of wages and hours in Greece

Pericles Drakos & Daphne Nicolitsas


 

Paper 10 - MetalGreece.pdf

Wage setting procedures in the metalworking sector in Greece

Daphne Nicolitsas

Abstract

The paper documents in detail the product market structure of the metal sector in Greece and the wage-setting practices followed therein. The main points to emerge are that wage-setting practices and more importantly wage outcomes differ significantly across subsectors of the metal sector. These differences could reflect subsector variation in product market structure. These variations could depend on, inter alia, differences in the production technology used in the subsectors and the identity of the employers’ associations as a single labour union is involved in all collective agreements across subsectors. It appears that in Greece, as in other countries, extensions are applied in sectors paying lower wages, with many small firms and low skilled workers.

 

Paper 11 - BargainingTrust.pdf

Collective bargaining and trust

Claudio Lucifora, Daphne Nicolitsas & Giulio Piccirilli

Abstract

Sectoral collective bargaining is still the prevalent mode of wage determination in most European countries, despite the criticism the latter has received for adding to wage rigidity and unemployment. The question is then, why do firms prefer to bargain at the sectoral rather than at the firm level. In this paper, we model the costs and benefits of different bargaining levels and show that firms' preferred bargaining level depends on, inter alia, the implicit cost of bargaining. Using data from the European Companies Survey (ECS) and the Wage Dynamics Network (WDN) we find that firms for which the cost of firm-level bargaining is high (due to, for example, industrial action, limited trust between employers and employees) are more likely to implement a sectoral-level agreement compared with firms in which the cost of bargaining is low. We also find that firms with a sectoral-level agreement have a lower probability of adjusting wages downwards when faced with a negative shock.

 

Paper 12 - HospitalityGreece.pdf

Wage setting procedures and developments in the hospitality industry in Greece

Daphne Nicolitsas

Abstract

The paper documents the product market structure and wage and employment developments in the hospitality industry in Greece together with details on the wage-setting practices followed in the sector. What distinguishes the sector is its importance for the economy, its relatively good performance during the current downturn, and the high number of sectoral and occupational agreements signed at national and regional level. Collective agreements in the sector are typically extended. The bargained wage decreased during the crisis but the sectoral average wage decreased by more. At all times the bargained basic wage appears to be binding for small firms.

 

Paper 13 - MarginsAdjustment.pdf

Firms’ margins of adjustment - The role of wage rigidities and industrial relations

Carlo Dell’Aringa, Claudio Lucifora and Federica Origo

Abstract

This paper investigates the margins of adjustments to demand shocks during the crisis using a rich firm-level panel dataset for the Italian metal engineering industry over 2009-2015. Thanks to the availability of detailed quantitative information on both wages and employment, we estimate the elasticity of the wage bill to demand shocks, distinguishing between different wage (base wage, wage cushion and, within the latter, collective performance related pay) and employment margins (permanent full-time employment, part-time employment, temporary employment and workers on short time working schemes). Our estimates highlight that the total wage bill is significantly influenced by demand shocks, largely due to changes in employment, especially temporary employment and workers on short-time working schemes. Wage rigidity to demand shocks is driven by rigidity of the base wage set by collective agreements at the industry level. The wage cushion adjusts slowly and with some lags, while performance related pay turns to be the most responsive component of wages to demand shocks. These results vary greatly by skill and firm-level industrial relations.

 

Paper 15 - RepresentativenessPirates.pdf

Collective contract representativeness and Pirate agreements: what are the effects on wages?

Claudio Lucifora and Daria Vigani

Abstract

Over the last decade, regulatory uncertainty characterizing the Italian system of collective bargaining and increasing fragmentation of social partners led to a dramatic expansion in the number of collective labor agreements and to the spread of the so-called ‘pirate agreements’, i.e. signed by ambiguous associations to grant formal cover for downward contractual dumping. In this paper, we start from a thorough examination of national collective agreements within each sector of economic activity to successively identify specific parameters for the definition of their representativeness. Once classified according with their level of representativeness, we use a longitudinal sample of working histories of Italian employees to explore wage outcomes associated with different labor agreements. We find evidence of a significant negative wage gap for workers employed under less representative agreements, that becomes even larger when considering pirate contracts only. The extent of the gap varies by job titles, firm size as well as industrial sectors, but it remains mostly negative across groups. Moreover, workers with a non-representative contract are also more likely to be paid below the collectively agreed minimum wage (defined at the industry-wide level). Finally, we move to the firm's perspective and explore how choosing to opt out of national collective bargaining relates with wages and employment adjustments in times of economic distress.

 

Paper 16 - ValueAdded.pdf

Assessing the employment law value added of collective bargaining – the case of Portugal [In Portuguese: Contratação coletiva: Que valor acrescentado?]

Pedro S. Martins and Joana Saraiva

Abstract: This study assesses the value added of collective bargaining with respect to general employment law. Our analysis is based on a new methodology that we introduce here and apply to six sectoral agreements from Portugal. We compare the contents of these collective agreements with the equivalent provisions established in the Labour Code. From an analysis of over 400 norms in the collective agreements, we find that 62% of them are identical to content of the Labour Code. Only 25% (an average of 16 norms per agreement) establishes more generous norms from the workers’ perspectives and only 12% (8 norms) does the opposite. We conclude that collective bargaining in Portugal may have a relatively limited role as a source of labour law (over and above its wage floors). We also present a number of potential explanations for the high level of overlap between collective bargaining and the labour code; and argue that the wide range of the Labour Code may be restricting the bargaining space for collective agreements as the former already establishes working conditions in a very large number of domains.

[In Portuguese: Resumo: Este estudo avalia o valor acrescentado da contratação coletiva em relação à legislação laboral de base. A análise baseia-se numa metodologia de comparação dos conteúdos de convenções coletivas, que apresentamos aqui e aplicamos a seis casos do setor privado em Portugal e às normas do Código de Trabalho (CdT). Da análise das cerca de 400 normas das convenções, verificamos que 62% limita-se a reproduzir os conteúdos do CdT. Por outro lado, apenas 25% (uma média de 16 normas por convenção) dispõe em sentido mais favorável para o trabalhador e 12% (8 normas) no sentido contrário. Concluímos que a contratação coletiva tem um papel relativamente reduzido como fonte efetiva de legislação laboral (para além dos salários mínimos que estabelece). Apresentamos ainda várias explicações potenciais para a elevada sobreposição entre as normas das convenções e do CdT; e a perspetiva que o CdT pode estar a restringir o espaço negocial da contratação coletiva ao estabelecer valores de referência num conjunto muito alargado de áreas.]

 

Paper 17 - CollateralDamage.pdf

Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad

Sónia Cabral, Pedro S. Martins, João P. dos Santos, and Mariana Tavares

Abstract

The increasing range and quality of China’s exports is a major ongoing development in the international economy with potentially far-reaching effects. In this paper, on top of the direct labour market effects of imports from China studied in previous research, we also measure the indirect effects stemming from increased export competition in third markets. Our findings, based on matched employer-employee data of Portugal covering the 1991-2008 period, indicate that workers’ earnings and employment are significantly negatively affected by China’s competition, but only through the indirect ’market-stealing’ channel. In contrast to earlier evidence, the direct effects of Chinese import competition are mostly non-significant. The results are robust to a number of checks and also highlight particular groups more affected by indirect competition, including women, older and less educated workers, and workers in larger, older and domestic firms.

 

Paper 18 - RentSharing.pdf

Rent Sharing in China: Magnitude, Heterogeneity and Drivers

Wenjing Duan and Pedro S. Martins

Abstract

Do firms in China share rents with their workers? We address this question by examining firm-level panel data covering virtually all manufacturing firms over the period 2000- 2007, representing an average of 200,000 firms and 54 million workers per year. We find robust evidence of rent sharing (RS): workers that would move from low- to high-profit firms would see their wages increase by about 45%. The results are based on multiple instrumental variables, including firm-specific international trade shocks. We also present a number of complementary findings that allow us to understand better the nature of RS in the country: RS is weaker in firms with more women and less educated workers; RS involves an element of risk sharing, as wages also decrease when profits fall; RS is lower in regions with more latent competition from rural workers; higher minimum wages tend to reduce RS; and, while employer labour market power reduces wages, it increases RS. Overall, despite its importance, RS in China is smaller and more symmetric than in developed economies, which reflects the weaker bargaining power of its workers and the different scope of its labour market institutions.

 

Paper 19 – JobsAct.pdf (published in Economia Italiana, 2018/2-3, pp.72–100)

The Jobs Act and Industrial Relations: a lost opportunity?

Claudio Lucifora and Paolo Naticchioni

Abstract

Following a long-standing tradition in Italy that considers social partners as the only responsible for setting the rules in industrial relations, the Jobs Act did not attempt to reform the collective bargaining system. In this paper, we ask whether this waiver in reforming the industrial relations system was a lost opportunity. The current setting, which is still very close to the one emerged from the major reforms of 1992 and 1993, has been strongly criticized for its wage rigidity, in particular during economic downturns. We discuss a number of issues currently debated, such as the progressive erosion of trade unions and employers’ associations representativeness, increasing non-compliance of collective bargained minimum wages, and the emergence of ‘pirate contracts’ signed by non-representative social partners. We also review recent evidence that has focused on the impact of centralized collective bargaining along the spatial dimension, where productivity differentials generate differences in unemployment and housing costs across regions. In the concluding section we discuss some policy proposals, such as the introduction of a statutory minimum wage, the importance of measuring employers and unions’ representativeness, and the strengthening of firm-level (or territorial) bargaining.

 

Paper 20 – Work in Progress

Contrasting institutions, contrasting fortunes: A note on collective bargaining in Portugal and Spain

Marta Martínez Matute and Pedro S. Martins

Preliminary Abstract: Despite the many similarities between the labour markets of Portugal (PT) and Spain (ES), unemployment increased much more in the latter since the financial crisis of 2008. This note argues that collective bargaining may have played a key role in these contrasting outcomes, despite its sectoral nature in both countries. We document a number of more nuanced institutional differences between the two countries, including: collective agreements (CA) are bargained jointly (separately) by both main trade unions in ES (PT); a CA involves multi-annual, price-indexed (annual, non-price-indexed) wage increments in ES (PT); wage increases are awarded to virtually all workers in ES (only those directly bitten by wage floors in PT). On the other hand, even if we find a significant degree of regional variation in collective bargaining wage floors in ES but not in PT, this is unlikely to be relevant given PT’s smaller size.

 

Paper 21 – Work in Progress

Collective bargaining and minimum wages: the case of Portugal

Pedro S. Martins

Preliminary Abstract: This paper examines the roles of the national and collective-bargaining minimum wages on a number of firm-level outcomes. The analysis draws on a country and period (Portugal, 2000-2017) featuring significant MW changes. We also exploit rich longitudinal matched employer-employee data, including to construct firm-year-specific bites and Kaitz indices. We find negative effects of both MW and CBMW on employment, inequality, firm sales and international trade (both exports and imports). However, the effects of MW much larger than those of CBMW, which may reflect measurement error and or non-compliance. The results are robust to different measures of the (CB)MW bite and different samples, except that they tend to be stronger for low-wage firms. The MW also tends to reduce inequality more at the bottom of the wage distribution while the CBMW is more effective at the top.

 

Paper 22 – Work in Progress

Collective bargaining and extensions in the metalwork industry: Evidence from Southern Europe

Claudio Lucifora, Pedro S. Martins, and Daphne Nicolitsas

Preliminary Abstract: Metalwork is a leading manufacturing industry in Europe and one in which collective bargaining is perceived to play an important role in its success. We examine this question by studying the cases of Greece, Italy and Portugal from a comparative perspective. We examine their market structures, employers’ associations, trade unions, collective agreements and extension procedures. When possible, we also consider the distribution of their wages and compliance with collective-bargaining wage floors.

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Pedro Martins,
2 Jul 2019, 14:56
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Pedro Martins,
2 Jul 2019, 14:56
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Pedro Martins,
2 Jul 2019, 14:56
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Pedro Martins,
2 Jul 2019, 14:57
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Pedro Martins,
2 Jul 2019, 14:57
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Pedro Martins,
2 Jul 2019, 14:56
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Pedro Martins,
2 Jul 2019, 14:56
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Pedro Martins,
2 Jul 2019, 14:56
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Pedro Martins,
2 Jul 2019, 14:56
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Pedro Martins,
2 Jul 2019, 14:56
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