The Effects of Collective Bargaining Systems on the Productivity Function of Firms: An Analysis of Bargaining Structures and Processes and the Implications for Policy Making

In recent years, individual and company bargaining have increasingly supplanted sector and country collective bargaining leading to increasingly heterogeneous and perforated, i.e. hybrid, national collective bargaining systems. Little is known about the relative effects of these different systems. In this paper the authors derive and test a comprehensive categorization of collective bargaining systems and argue that different systems are associated with different production functions and therefore have different effects on labour productivity. The hypotheses are tested using representative workplace level data for all member states of the European Union. It is found that the performance of coordinated sector collective bargaining systems is higher than for all other forms of collective and individual bargaining. Policy implications of the results are discussed as these results challenge attempts to reform collective bargaining in Europe.