A Cartel Analysis of the German Labor Institutions and its Implications for Labor Market Reforms - 10.1628/093245607781871381 - Mohr Siebeck
Economics

Justus Haucap, Uwe Pauly, Christian Wey

A Cartel Analysis of the German Labor Institutions and its Implications for Labor Market Reforms

Volume 163 () / Issue 3, pp. 503-516 (14)

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This paper offers a cartel explanation for the stability of German collective bargaining institutions. We show that a dense net of legal safeguards has been woven around the wage-setting cartel. These measures make deviation by cartel insiders less attractive and simultaneously erect entry barriers for alternative unions. As we argue, many recent labor policy measures, which make wages more flexible, serve to further stabilize the labor cartel, while truly procompetitive proposals have not been implemented, exactly because of their destabilizing effects. We propose policy measures that remove entry barriers and facilitate outside competition by alternative collective bargaining organizations. (JEL: J 52, K 31, L 12)
Authors/Editors

Justus Haucap holds the Chair for Industrial Economics and Competition Policy at the Ruhr-University of Bochum since 2004 and has been a Research Professor at the German Institute für Economic Research (DIW) in Berlin since 2005.

Uwe Pauly No current data available.

Christian Wey holds the Chair for Network Economics and Information and Communication Economics at the TU Berlin since 2003 and is Head of the Department for Information Society and Competition at the German Institute für Economic Research (DIW) in Berlin.