Seminar Information:


The Stability of the Industry-wide Wage Setting in Germany

Berlin Lunchtime Meeting


SPEAKER: Dr Christian Wey, Social Science Research Centre Berlin

CHAIR: Dr Ray Cunningham, Anglo German Foundation


Date: 21 May 2003

Location: Max-Liebermann-Haus, Pariser Platz 7, 10117 Berlin


In his speech Christian Wey will explain German labour market institutions and labour market policies using cartel theory. Cartels are generally not stable as insiders and outsiders have incentives to defect from cartel agreements. The German system of industry-wide wage bargaining, which requires the formation of a cartel on both the workers’ and the employers’ side, has, however, shown an astonishing persistence. It is argued that this stability is the result of German labour market institutions and German labour market policy. These institutions and policies protect the tariff parties against outsider competition at the expense of the unemployed, start-up firms, consumers and tax payers. Recent trends towards more flexible wage setting help to stabilize the collective tariff system, and are therefore, not suited to cure the German labour market misery by strengthening competition.


Christian Wey is Research Fellow at the Social Science Research Centre Berlin. His main fields of research are industrial organization theory, competition policy, location and trade theory, law and economics.