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

Florian Baumann, Tobias Brändle

• This article establishes a link between the degree of productivity dispersion within an industry and collective bargaining coverage of the firms in the industry. In a stylized unionized oligopoly model, we show that differences in productivity levels can affect the design of collective wage contracts a sector-union offers to heterogeneous firms. Using German linked employer–employee data, we test a range of our theoretical hypotheses and find empirical support for them. The dispersion of sector-level labour productivity decreases the likelihood of firms being covered by a collective bargaining agreement on the industry level, but increases the likelihood of firms being covered by firm-level agreements. The results hold for different subsamples and (panel) estimation techniques.