International Trade and Collective Bargaining Outcomes: Evidence from German Employer-Employee Data

An emerging literature on the role of unions in international firms mitigates the general perception that exporting firms pay higher wages. In theory, fiercer competition due to the internationalization of a firm negatively feeds back into the unions' rent extraction ability. We propose an empirical test of that prediction using German linked employer-employee data, where the information about plant- and industry-level collective agreements enable us to partition plants into different bargaining regimes. To test the rent-sharing argument we exploit the individual worker information of our data and construct profitability measures that are free of the plant's skill-composition. Our results indicate that rent-sharingin exporting plants is lower if wages are bargained collectively at theplant level. In line with the theoretical prediction we show that a surge in those plants' export intensity is negatively associated with wages.