We Want them all Covered ! Collective Bargaining and Firm Heterogeneity . Theory and Evidence from Germany 1

This paper establishes a link between the extent of collective bargaining and the degree of productivity dispersion within an industry. In a unionised oligopoly model we show that for only small differences in productivity levels. a sector-union can design a collective wage contract that covers a wide range of heterogeneous firms. In sectors with higher… CONTINUE READING