Gender differences in wage negotiations have been offered as a popular explanation for why the gender gap in pay persists in the United States. In this study, we use data from an artificial wage ...negotiation experiment (N = 307) to examine the relationship between gender and wage negotiations and to test whether gender-role attitudes moderate this relationship. We find that gender-role attitudes moderate how gender influences the decision to negotiate, but not the outcomes of negotiations, and that forced negotiations do not lead to additional gains for women regardless of their gender-role attitudes. We conclude with a discussion of implications and directions for future research.
When a job-seeker and an employer meet, find a prospective joint surplus, and bargain over the wage, conditions in the outside labor market, including especially unemployment, may have limited ...influence. The job-seeker's only credible threat during bargaining is to hold out for a better deal. The employer's threat is to delay bargaining. Consequently, the outcome of the bargain depends on the relative costs of delays to the parties, rather than on the payoffs that result from exiting negotiations. Modeling bargaining in this way makes wages less responsive to unemployment. A stochastic model of the labor market with credible bargaining and reasonable parameter values yields larger employment fluctuations than does the standard Mortensen-Pissarides model. (JEL J22, J23, J31, J64)
I analyze the strategic use of debt financing to improve a firm's bargaining position with an important supplier—organized labor. Because maintaining high levels of corporate liquidity can encourage ...workers to raise their wage demands, a firm with external finance constraints has an incentive to use the cash flow demands of debt service to improve its bargaining position with workers. Using both firm-level collective bargaining coverage and state changes in labor laws to identify changes in union bargaining power, I show that strategic incentives from union bargaining appear to have a substantial impact on corporate financing decisions.
Pre-play non-binding communication in organizations is prevalent. We study the implications of pre-play, private and public, wage proposals in labor markets. To that end, we develop a theoretical ...model from which we derive certain hypothesis that we test through a laboratory experiment. In the baseline, that depicts a typical labour market interaction, the employer makes a wage offer to the worker who may then accept or reject it. In subsequent treatments, workers, moving first, make private, non-binding, wage proposals to the employer. In a following treatment, the proposals are made public. Our findings suggest that both private and public wage proposals promote higher wages, efficiency, and income equality. Public information on wage proposals benefits firms more than workers while, workers benefit more under private proposals where income inequality is the lowest. We find some support in our data on workers conforming to their co-workers’ wage proposals when these are public. Finally, the gender gap observed in the baseline on acceptance rates and workers’ income vanishes when proposals are present.
•I investigate experimentally how wage transparency affects labor relationships.•Treatments compare exogenous and endogenous wage transparency.•Exogenous transparency is correlated with a higher ...share of equal offers.•When associated with costs for employees, wage transparency is rarely induced.•Employees almost always request wage information when this is costless.
This paper experimentally investigates how exogenous and endogenous wage transparency affect the interactions between employers and employees in a labor environment characterized by gift exchange. After the first part of the experiment in which wage offers always remain private information, three treatments in the second part either make wages fully transparent or leave the choice to establish (costly) wage transparency either to employees or employers. When full transparency is induced exogenously, the share of equal wage offers increases in the second part. At the same time, employers and employees rarely induce wage transparency themselves. Moreover, in the treatment where employees could enforce transparency, average wage offers and performance are significantly lower than in the other treatments. Results from a control treatment indicate that employees’ requests for wage information are cost-sensitive. If information about co-employees’ wage offers is costless, employees almost always ask for this information, thus achieving nearly full wage transparency. Further analyses reveal that wage offers in the second part seem to be higher under transparency than under non-transparency of wage offers.
We introduce search unemployment into Melitz's trade model. Firms' monopoly power on product markets leads to strategic wage bargaining. Solving for the symmetric equilibrium we show that the ...selection effect of trade influences labor market outcomes. Trade liberalization lowers unemployment and raises real wages as long as it improves average productivity. We show that this condition is likely to be met by a reduction in variable trade costs or by entry of new trading countries. Calibrating the model shows that the long-run impact of trade openness on the rate of unemployment is negative and quantitatively significant.
The moral economy is a set of institutionalized rules, norms, and values that guide action in market economies. Historically, the norm of wage negotiations has been a central pillar of the U.S. moral ...economy, but research suggests that this may be changing. In the present study, the authors seek to evaluate whether the norm of wage negotiations is decoupled from the U.S. moral economy. Results of a factorial survey experiment administered to a quota sample of U.S. adults (N = 707) indicate that the norm of wage negotiations is weak: it is largely bipolar, conditional, and of a low to moderate intensity, with disagreement over the norm as well as the circumstances demarcating the norm. These social cleavages, however, do not fall along demographic lines: the character of the norm is comparable across groups. These findings reveal that there has been an erosion of the distributional norms underlying the U.S. moral economy.
We develop and estimate a medium scale macroeconomic model that allows for unemployment and staggered nominal wage contracting. In contrast to most existing quantitative models, employment adjustment ...is on the extensive margin and the employment of existing workers is efficient. Wage rigidity, however, affects the hiring of new workers. The former is introduced via the staggered Nash bargaining setup of Gertler and Trigari (2006). A robust finding is that the model with wage rigidity provides a better description of the data than does a flexible wage version. Overall, the model fits the data roughly as well as existing quantitative macroeconomic models, such as Smets and Wouters (2007) or Christiano, Eichenbaum, and Evans (2005). More work is necessary, however, to ensure a robust identification of the key labor market parameters.
This article studies how decentralization of wage bargaining from sector to firm level influences wage levels and wage dispersion. We use detailed panel data covering a period of decentralization in ...the Danish labor market. The decentralization process provides variation in the individual worker’s wage-setting system that facilitates identification of the effects of decentralization. We find a wage premium associated with firm-level bargaining relative to sector-level bargaining and that the return to skills is higher under the more decentralized wage-setting systems. Using quantile regression, we also find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems.
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