Starting from the 1990s the collective bargaining process in European economies has gradually shifted from centralised bargaining to firm-level agreements. This transition allows firms to change their internal wage structure responding to local conditions, with potentially contrasting effects on within-firm inequality. This paper examines the empirical association between firm-level bargaining and within-firm wage inequality, particularly the distance between wages of highly-paid and low-paid employees. We exploit employer-employee data from the European Structure of Earnings Survey spanning the period 2006-2018 for six European economies – Belgium, Spain, Germany, France, the Czech Republic and the UK – allowing to test for heterogeneity of main effects across different collective bargaining traditions and over time. The findings document ample heterogeneities in the estimated effect of firm-level bargaining, across countries and over time. At the same time, such heterogeneities do not map neatly into country-specific features of national bargaining systems or into broad classifications of countries based on prevailing bargaining levels.
Firm-level bargaining and within-firm wage inequality: Evidence across Europe
Valeria Cirillo
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2025-01-01
Abstract
Starting from the 1990s the collective bargaining process in European economies has gradually shifted from centralised bargaining to firm-level agreements. This transition allows firms to change their internal wage structure responding to local conditions, with potentially contrasting effects on within-firm inequality. This paper examines the empirical association between firm-level bargaining and within-firm wage inequality, particularly the distance between wages of highly-paid and low-paid employees. We exploit employer-employee data from the European Structure of Earnings Survey spanning the period 2006-2018 for six European economies – Belgium, Spain, Germany, France, the Czech Republic and the UK – allowing to test for heterogeneity of main effects across different collective bargaining traditions and over time. The findings document ample heterogeneities in the estimated effect of firm-level bargaining, across countries and over time. At the same time, such heterogeneities do not map neatly into country-specific features of national bargaining systems or into broad classifications of countries based on prevailing bargaining levels.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
