Plan of the talk

1. Micro-based dataset for collective bargaining and productivity analysisby Daniele AglioDiscussion by Paloma Lopez-GarciaFirst CompNet’s Data User Conference8-9 October 2019, Paris

2. Plan of the talk 1 Dataset: some further suggestions and questions 2 Preliminary empirical research 3 Further research avenues

3. Merge of 2 waves of WDN with CompNet • 3 waves, but data available for the 1st wave (2007-2009) and the 2nd wave (2010-2013) • Info on level of collective bargaining of firms: i) firm-level; ii) centralised; iii) two-tiers (both centralised and firm-level); iv) no collective bargaining • Can collapse shares of firms subject to each level at the country (14 countries), macro-sector (4) and size-class (3, starting at 20 employees) Questions: • The merged data spans from early 2000s to 2013 but WDN only available at two points in time: what are your assumptions? • When were the surveys carried out? • In the two-tier system: Do firm-level agreements top up upper level ones? • What does it mean “no collective bargaining”? Upper level? No unions in the firm but firm decides? Dataset: what Daniele does (and some questions)

4. The institutional framework to set wages depends on: • The level of collective bargaining • The collective bargaining coverage • The degree of wage co-ordination (even if bargaining at industry or regional level) • The flexibility of the system, giving firms in exceptional circumstances the possibility to opt-out If WDN does not offer info on the others, you should include it from other sources (even if at aggregate level) • Why? It has been proven that co-ordination, coverage and flexibility are fundamental factors shaping the impact of the level of collective bargaining (OECD Employment Outlook 2018): you have to control for those Dataset: some further suggestions

5. Presentation of the data: • There are three established facts regarding the level of collective bargaining (see for example Calmfors 1993): • Prevalence of centralised collective bargaining in Western countries, relative to Eastern • Secular trend to decentralisewith the aim to better aligning wage and productivity growth and to enable firms to set incentive schemes (performance-related pay) • It was done by moving down one step the level of bargaining or by adding an additional firm-level layer (normally only allowed to top up wages decided at the central level) • During the crisis, some reforms added flexibility to the system (opt-out clauses) • Coverage and union-prevalence at the firm-level are much larger in manufacturing relative to services • I would suggest to start by confirming those facts/trends with the WDN data Dataset: some further suggestions (and some questions)

6. Plan of the talk 1 Dataset: some further suggestions 2 Preliminary empirical research 3 Further research avenues

7. “test whether there is a relation between TFP level (average at the country/sector/size) and the level of collective bargaining” Whyshould there be a (causal) relation between the level of collective bargaining and the level of TFP? • I only find one argument linking levels, but it goes all the way around: Only large (and productive) firms have union representation and firm-level agreements Research question • This is a fact across all countries, but I show evidence from Spain • The prevalence rate of firm-level agreements is around 0 for firms with less than 50 employees • Productivity strongly increases with size Source: Bank of Spain

8. All rest of arguments link the level of bargaining and TFP growth, instead of level Given dataset structure, advisable to use a diff-in-diff methodology • Firm-level bargaining enables better aligning wage and productivity growth: increasing firm competitiveness – good for exports, mk. share Research question Wage-productivity misalignment is lower in less centralised systems; data for AT, ES, IT and PT, 2005-2007 Source: Lopez-Garcia, P. (2015): “Wages, productivity and competitiveness: a granular approach”, ECB EB 2015(8) Notes: WDN merged with CompNet dataset

9. Firm-tailored incentives schemes can increase productivity of workers – positive impact on TFP growth • Unionised firms have often better non-wage working conditions - positive impact on TFP growth • If wage is set at centralised level and firm has poor productivity performance, high wage rises might force the firm out increasing sector productivity growth – increases allocative efficiency (positive for sector) • If not forced out, firms comply by shifting resources from other productive uses like investment or R&D – negative impact on TFP growth • Existence of unions at firm-level can decrease effort of workers given it is more difficult to fire shirking workers –negative impact on TFP growth Link level bargaining and TFP growth: theory is inconclusive

10. Plan of the talk 1 Dataset: some further suggestions 2 Preliminary empirical research 3 Further research avenues

11. Use of the full info in CompNet and WDN to answer lots of interesting questions: • What is the contribution of the trend towards decentralization ofcollective bargaining in explaining therise in income inequality? And in productivity dispersion? • What is the contribution of the level of collective bargaining to explain low post-crisis wage growth? Estimate a Phillips curve interacting labour market slack with the WDN info • Is the level of collective bargaining affecting allocative efficiency? • How is the level of collective bargaining affecting firms at the tails of the distribution? And firms with different characteristics (financial distress, low capitalised etc.) • Has the trend to decentralise bargaining increased the resilience of economies to crisis (capacity to bounce back quickly)? • Is decentralisation muting ULC growth and promoting exports (intensive or extensive margin)? Other possible research questions