Labor Market Institutions and the Composition of Firm Compensation: Evidence from Brazilian Collective Bargaining
Abstract/Contents
- Abstract
- This paper studies the relation between the wage and amenity components of firm compensation under collective bargaining. A posting model of wages and amenities where Nash bargaining between unions and employers determine firm-specific compensation bundles shows that unions can offset the markdowns incurred by workers in monopsonistic labor markets. Merging linked employer-employee data to the universe of collective bargaining agreements (CBAs) in Brazil, worker transitions across establishments and their wages are augmented by the workplace amenities codified in the text of CBAs. To estimate the value of these amenities, I decompose revealed preference measures of the value of employment at an establishment into corresponding wage premiums and CBA clauses. Dispersion across establishments in terms of compensation premiums increases once amenities are accounted for, i.e., variance increases by 4%. Evidence of compensating differentials is only found in low rent sectors, but are otherwise reversed|that is, there is a positive relation between wage and amenity premiums. Leveraging an unexpected shock to bargaining power that differentially impacted negotiating counterparts, I obtain causal effects on wage premiums, amenity premiums, and employment. This analysis reveals elasticities of labor supply with respect to compensation of 1.82, meaning that unions are in fact countering employer market power (with markdowns between 0.73 and 0.83). Assuming efficient bargaining, the estimates indicate that amenities account for 29% of compensation.
Description
| Type of resource | text |
|---|
Creators/Contributors
| Author | Lagos, Lorenzo |
|---|---|
| Organizer of meeting | Jarosch, Gregor |
| Organizer of meeting | Sorkin, isaac |
Subjects
| Subject | collective bargaining |
|---|---|
| Subject | compensating differentials |
| Subject | industrial relations |
| Genre | Text |
| Genre | Presentation slides |
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- This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY).
Preferred citation
- Preferred citation
- Lagos, L. (2021). Labor Market Institutions and the Composition of Firm Compensation: Evidence from Brazilian Collective Bargaining. Stanford Digital Repository. Available at https://purl.stanford.edu/fw047qh2438
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SITE Conference 2021
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