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

In theoretical trade models with variable mark-ups and collective wage bargaining, exposure to international markets might reduce the exporter wage premium. We test this prediction using linked German employer-employee data covering the years 1996-2007. To separate the rent-sharing mechanism from assortative matching, we exploit individual worker information to construct profitability measures that are free of skill composition. Our results show that rent-sharing is less pronounced in more export-intensive firms or in more open industries. The exporter wage premium is highest for low-productivity firms. In line with theory, these findings are unique to the subsample of plants covered by collective bargaining.