Firm-level bargaining and within-firm wage inequality: Evidence across Europe

The decentralization of wage-setting – from multi-employer bargaining to firm-level agreements – allows firms to adjust their internal wage structure but has uncertain effects on inequality. This article estimates the difference in within-firm wage inequality between centralized and firm-level bargaining. Exploiting employer–employee earnings data over 2006–18 for Belgium, Czechia, France, Germany, Spain and the United Kingdom, we compare various bargaining traditions over a period of economic change. The findings defy simple classifications of national bargaining systems: the difference in inequality between firm-level and centralized bargaining varies considerably across and within countries and there is no common time trend.