Research

Job Market Paper

Firm Heterogeneity and Collective Agreements: a Structural Model of Minimum Wages
[PDF link] | Abstract
In an environment with high coverage of collective agreements, unions and employers in large firms are able set the level of minimum wages that fit them best in terms of wages, and unemployment, because they can drive competitors out of the market, having detrimental effects on small firms. This paper develops a structural search and matching model with two-sided heterogeneity, minimum wages, and collective bargaining negotiations. The model is tested on Spanish data to explain why unions, and surprisingly employers are willing to raise the minimum wage: because the gain labour market power. In a nutshell, the rise in the minimum wage level causes costs increases that push small firms out of the market, or leads them to fire workers not productive enough to pay for the minimum wage; large firms are not so much affected but enjoy a new stock of unemployed at their disposal and find it easier to fill vacancies; furthermore employed workers have less alternative offers to bring the current employers into competition for their services and be granted a pay raise. In a counterfactual exercise, I show that in environments of low unemployment workers and employers would be willing to raise the minimum wage level. A social planner would promote representation of unions and employers in small firms to set the minimum wage level, and so reduce externalities.

Working Papers

Women’s Voice at Work and Family-Friendly Firms With Jose Garcia-Louzao
[CESifo WP No. 10982] | Abstract
Using a new dataset covering all firm-level agreements signed in Spain between 2010 and 2018, we shed light on whether greater representation of women in the bargaining table can foster family-friendly policies in the workplace. Our results are suggestive that if women’s needs become more salient during negotiations over company policies, this may make firms more family-friendly.
Collective Bargaining Agreements and Worker Outcomes: Evidence from the 2012 Spanish Labor Market Reform With Emil Bustos
Abstract
After a historical major Spanish labour market reform in 2012, we find that the reduction of severance payments and the setting of new contracts that facilitated contracting were the most decisive policies to create jobs in the long term, despite wage cuts. On the contrary, we find that policies related to collective bargaining, such as firm-level priority in collective contracts, ultra-activity, and opt-out requirements did not have an impact on job creation or wages. We derive these results by exploiting two datasets: the first one, MCVL, has information about the complete employment histories of workers and their monthly wages. The second, REGCON, has thorough information about the clauses negotiated in collective agreements. By following workers with collective contracts signed before and after the reform, we are able to measure the effect of the reform on jobs and wages for the different policies enacted.

Publications

International Oligopoly Union Coordination Under the Presence of Externalities and Costs. International Economics and Economic Policy (2024)
[Published version] | Abstract
Despite the advantages of holding monopoly power, unions rarely coordinate their wage demands across countries. In this paper, I argue that the costs of coordination and externalities can explain such behaviour. I build a model of an international unionised oligopoly where a monopolist sells two differentiated products, produced in different countries in an integrated market. Monopolistic unions set wages in each country, and the firm keeps the right-to-manage. If the domestic union raised its wage, the firm would substitute the production of the domestic good for the foreign one, reducing employment. The union would be worse off and it would have no incentives to deviate from the status quo. The foreign union experiments an increase in employment and wages, enjoying a positive externality. If they were to coordinate they could extract rents due to the internalisation of these externalities, but at a cost of coordination. The main results are: unions coordinate whenever products are very substitutable because the externalities are high enough to offset the costs; costs have to be relatively low for both unions to coordinate; and under the Stackelberg a leader both unions are better off thanks to double-marginalisation.