Discussion of 'The Link between Job Security and Wages : A Comparison between Germany and the UK'

There can be no doubt that job security and wages are intimately linked. From the point of view of workers, they both are desirable attributes of a job. From the point of view of employers, they both are costly to provide. On the level of the economy at large, they are joint outcomes of supply- and demand-side influences, including productivity, structural change, and the institutional settings of the labor market. Hübler and Hübler (2009) have written a thorough paper in which they seek to establish the empirical relation between the two variables, using data from Germany and the UK. They mobilize a broad array of econometric tests and methods and devote great attention to measurement issues, particularly those that pertain to job security (or insecurity). For a wide range of objective and subjective measures of job security, and with both German and UK data, they find strong support for the idea that higher job security, by strengthening the bargaining position of workers, leads to higher wages (the "bargaining hypothesis"). Additional issues addressed in the paper include differences between Germany and the UK and asymmetries in the response of wages to positive and negative changes of the job security measure