This paper examines the impact of collective wage agreements in China. We use firmspecific data to estimate the effect of collective wage contracts on average wages and benefits of workers and on the performance of firms. This is the first empirical study that uses firm survey data to examine this issue. We find that collective wage agreements significantly increased the average wages of blue-collar workers without significantly affecting the average wage of administrative employees. Other determinants of wages affect the two groups in a similar fashion. We also find weak evidence that collective wage agreements may increase firm performance.
