2019/12 | LEM Working Paper Series | ||||||||||||||||
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Firm-level pay agreements and within-firm wage inequalities: Evidence across Europe |
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Valeria Cirillo, Matteo Sostero and Federico Tamagni |
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Keywords | |||||||||||||||||
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within-firm wage inequalities; occupational wage-gap; firm-level bargaining; matched employer-employee data.
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JEL Classifications | |||||||||||||||||
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J31, J33, J51, J52.
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Abstract | |||||||||||||||||
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This article investigates the relation linking single-employer
bargaining and within-firm wage
dispersion -- a significant driver of overall wage inequality. The
study considers six European economies (Belgium, Spain, Germany,
France, the Czech Republic and the UK), featuring different
collective bargaining institutions, in 2006 and 2010. We examine two
different measures of within-firm inequality, allowing to capture
how different groups of employees (top vs. bottom paid, and managers vs. low-layer employees) may differently benefit or lose
from firm-level bargaining. Our findings show that firm-level
bargaining has heterogeneous effects across countries, over time and by inequality
measures. We interpret our evidence as supporting that
country-specificities and the heterogeneous balance of power within
organizations represent key elements to understand the role of the
bargaining system in shaping inequalities.
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