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Antoine Valtat (CREST): "Representativeness of Labor Market Institutions"

October 4, 2018 @ 12:30 pm - 1:30 pm

Firms and Markets Seminar
This paper shows employer federation representativeness to be one of the key determinants of industry-level wage bargaining.  Indeed, large firms have an incentive to raise wage-floors. In turn, this excludes the smallest firms from the product and labor market.  Thus, one should expect to see high bargaining wage-floors in industries dominated by large employer associations.  After formalizing these ideas within a theoretical model, the latter is put to the test using French Administrative Data.  I construct indexes measuring the domination of large firms within Industry-level employers federations and I find that the larger the indexes, the larger the negotiated wage. The main conclusions of the paper are that the prevalence of large firms within an industry is negatively related with the degree of product market competition and positively correlated with the level of unemployment.