Opening Clauses in Collective Bargaining Agreements : More Flexibility to Save Jobs?

This paper analyses the impact of opening clauses in German collective bargaining agreements (CBAs) on job flows. Opening clauses should provide firms with more flexibility in economic crises. Therefore, firms operating under a CBA with opening clauses are expected to have lower job turnover, in particular lower job destruction under bad business conditions, and, as a result, higher job growth. For our empirical analyses we use the IAB Establishment Panel, a large and representative data set on German establishments. We supplement the data with additional information on the existence of opening clauses in CBAs in the West German manufacturing sector (the IAW Data Set on Opening Clauses). By means of a matching approach, we reveal that the existence of opening clauses has a significantly positive effect on job growth due to a negative effect on job destruction and a positive effect on job creation. In contrast, explicit knowledge of opening clauses or their application has no significant effect on job flows