SFB 303 Discussion Paper No. A - 221

Author: Neumann, Manfred J. M., Roland Schmidt, and Elisabeth Schulte
Title: Determinants of Contract Wages in Germany
Abstract: This paper investigates the determinants of German pay-rise contracts which are collectively negotiated at the industry level. Key findings from data of seven industries are: first, the contracts are shaped by the German unions' neutrality doctrine which asserts that contracts are neutral towards employment, if they take full account of expected inflation and labour productivity growth. Second, the contracts are based on economy-wide rather than industry-specific productivity growth. The evidence suggests that the German labour market is dominated by a cooperative solution which is not neutral towards employment.
Keywords: Expected inflation,Employment,Labour-productivity, Neutral contracts
JEL-Classification-Number: 313
Creation-Date: January 1989
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