German employment relations are characterized by a distinct dual system: First, working conditions and wages are determined by industry level collective bargaining agreements. Second, on the establishment level the works council is responsible for employer-employee negotiations. But since the...

Collective bargaining agreements still play an important role in the German wage setting system. Both existing theoretical and empirical studies find that collective bargaining leads to higher wages compared to individually agreed ones. However, the impact of collective bargaining on the wage...