Abstract
ABSTRACT Local institutions in the shape of collective wage bargaining in firms are important for wage differences among labour of various origins. This paper considers local rent-sharing in Danish firms and finds that local wage bargaining reduces wage gaps between cross-border commuters of Danish, Swedish, German and Polish origins. Wage gaps are found to be between 6% and 12%, while individual union membership reduces the wage gap. Local peer effects, on the other hand, may increase wage gaps particularly for cross-border commuters of Polish origin, which can be interpreted as a form of local club behaviour in bargaining at the firm level.
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