Industrial Relations, Collective Bargaining Agreements, Labour Demand Composition and Local Labour Market Concentration

Abstract

This study investigates the impact of local labour market concentration on wage and non-wage attributes, leveraging demand-side panel data. The analysis replicates the standard findings on wage and hiring elasticity, potentially revealing an additional layer-abstention from collective bargaining agreements (CBAs) could lead to a double markdown on wage costs. Moreover, employer concentration reduces both employer association membership and union representation within small firms. In concentrated labour markets, there is a higher likelihood of forgoing both first-tier and second-tier collective agreements, resulting in adverse effects on workers' wages and non-wage attributes. Additionally, even when firms use CBAs, strategies to optimise labour costs at the expense of workers emerge, prominently featuring the misalignment of CBAs. Local labour market concentration increases employment practices that optimise and reduce labour costs, such as a greater reliance on part-time contracts and external consultants. The analysis shows that reduced competition in the labour market influences diverse facets of employment relationships, revealing patterns that extend beyond the conventional understanding of wage and hiring dynamics.