Overall, these results shed light on an interesting phenomenon: although the presence of trade unions (measured by their density and collective bargaining coverage) continues to decline, the unions that still operate appear to have reinforced and increased their bargaining power, which is reflected in the appearance of (or increase in) wage premia associated with col- lective agreements. Rising wage premia suggest that the unions which were strong enough to maintain their position and presence—most likely because of their effect on efficiency, with a benefit for employers as well—managed to achieve their goals in terms of wage agreements. We link these changes to the developments in the CE3  s labor market institutional reforms and developments. There was no single policy reform which resulted in a sudden increase in the bargaining power of trade unions. Rather, we have identified a series of small steps which together led to a higher degree of engagement of the social part- ners in policy-making, and thus to an improvement of their negotiating position (as well as of their negotiating skills). These steps included direct actions aimed at reforming the social dialogue (such as the EU working councils directive), as well as various changes in the CE3  s labor market policy which required active involvement on the part of trade unions. Although our measure of firms’ restructuring during the transition allowed us to control for a great deal of the unob- served differences between firms in the CE3 countries, some of our results may be affected by residual selection issues. In particular, the selection of less efficient low paid firms into the unionized sector may attenuate any positive measured effect of unions on wages. Accordingly, our results are likely to underestimate the true effect of collective agreements on wages. A number of questions about future institutional developments remain open. On the one hand, changing labor market struc- ture and segmentation observed in several of the EU countries are likely to undermine the presence of trade unions. On the other hand, further changes could improve the relative position of the weaker unions in the CE3. For example, the Czech Republic introduced in 2006 changes to its labor code (effective as of 2007) which broadened the scope of issues which may fall under collective bargaining agreements ( EC , 2010 ).