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DCO-ZXE089-20040200-jgfPP1 Czech Firm-Level Bargaining and Wages EVIDENCE FROM MATCHED EMPLOYER-EMPLOYEE DATA Štěpán Jurajda CNB September 14, 2005.

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Presentation on theme: "DCO-ZXE089-20040200-jgfPP1 Czech Firm-Level Bargaining and Wages EVIDENCE FROM MATCHED EMPLOYER-EMPLOYEE DATA Štěpán Jurajda CNB September 14, 2005."— Presentation transcript:

1 DCO-ZXE jgfPP1 Czech Firm-Level Bargaining and Wages EVIDENCE FROM MATCHED EMPLOYER-EMPLOYEE DATA Štěpán Jurajda CNB September 14, 2005

2 DCO-ZXE jgfPP1 1 OUTLINE 1. DATA 2. COVERAGE 3. ANALYSIS OF WAGE LEVEL (mean and median) a.at individual level b.at firm level

3 DCO-ZXE jgfPP DATA AND MEASUREMENT ISPV (MPSV=MoL, Trexima) –entrepreneurial sector only –firms with over 10 employees Data have lower sampling rates for smaller firms. Weighting matters for firms with under 250 employees. Hourly wages for 1Q 2004 in over 2500 firms. Add: 4Q 2003 indicator of firm-level collective agreement (with wage stipulations) based on firm answers in ISPV and a follow-up firm telephone survey: 2000 firms have CA i.e. 24% missing (more likely to be smaller firms, foreign or private firms, in hotel/restaurant, retail and construction). Add: 4Q2003 indicator of higher-level agreements (industry-level) based on MoL extensions: 450 firms, of which 250 have the firm-level CA indicator available.

4 DCO-ZXE jgfPP UNION COVERAGE 57% (74%) [85%] of employees are covered by firm-level coll. agreement (CA) based on full (limited) [no] weighting. Combining the firm- and higher-level CAs, the coverage is 70% (80%) [90%]. Even if we suppose that all missing-CA-indicator firms have no CA, 44% (61%) [75%] of employees are still covered by firm collective agreements. => A safe bet is that union coverage is over 50% (70%) before (after) extensions.

5 DCO-ZXE jgfPP COVERAGE of firm-level CA in firms over 250 employees (unweighted)

6 DCO-ZXE jgfPP1 5 3a. INDIVIDUAL WAGE ANALYSIS: The weighted average hourly wage is a bit higher in firms with firm CA (117 vs. 115CZK). The weighted median wage is 10% (8 CZK) higher with firm CA (101 vs. 83 CZK). Excluding top 1% of wages (>451), covered avg. wages are 8% higher (103 vs. 95). Excluding managers (ISCO<20) avg. (median) covered wages are 6% (17%) higher. Average log-wage trade-union premium of +10% is not affected by worker demographics, but drops to 0 after controlling for firm size and 2-digit industry. There is no unconditional log-wage premium to having a higher-level CA, but controlling for worker and/or firm characteristics, there is a +5% gap compared to no-CA firms. Covered firms pay substantially more to most of their workforce, but not their managers. But this wage gap disappears once we compare firms of similar size and industry. In firms with over 250 employees (limited weighting=full weighting): –the avg. wage is 3 CZK lower and the median wage is 4 CZK higher in covered firms –unconditional log-wage premium to firm-level CA is zero but it is -20% for higher-level CA; however, conditional log-wage gaps are small and mostly insignificant. Conditional firm-level-CA log-wage premium in large firms: –for men with college: -0.23, high-school: -0.14, apprenticeship: 0, primary: 0 –for women with college: -0.17, high-school: -0.10, apprenticeship: 0, primary: 0 Within firm type, those firms that have a CA pay less to highly productive (male) workers.

7 DCO-ZXE jgfPP1 6 3a. BY INDUSTRY Wages in Large Firms: Effect of Firm-Level CA (ignoring higher CAs) Average Log-Wage Gap (firm-CA/no-CA) Sample Number of Firms Fraction with Col. Agreement Raw GapAdjusted Gap Agriculture Mining and Metallurgy Manufacturing Utilities Construction Retail Hotels, Restaurants Transport Banking and Insurance Real Estate and R&D Other Services Total

8 DCO-ZXE jgfPP1 7 3a. BY INDUSTRY Wages in All Firms: Effect of Firm-Level CA (ignoring higher CAs) Average Log-Wage Gap (firm-CA/no-CA) Sample Number of Firms Fraction with Col. Agreement Raw GapAdjusted Gap Agriculture Mining and Metallurgy Manufacturing Utilities Construction Retail Hotels, Restaurants Transport Banking and Insurance Real Estate and R&D Other Services Total

9 DCO-ZXE jgfPP Things to do Of course, the descriptive comparisons provided up to now do not identify the causal effect of trade union coverage on wages. What more can one do with the available cross-sectional data? INDIVIDUAL WAGE ANALYSIS – Run quantile regressions – Is there an effect on gender wage gaps? (no) – Is predictive power of occupation dummies stronger in unionized firms? (no) – Etc. FIRM-LEVEL ANALYSIS –Control for propensity score (matching) instead of relying on regressions, DiNardo and Lee (2004) –Card and de la Rica (2004): Spanish wages about 10 percent higher with firm-specific contracts compared to industry agreements.


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