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Efficient Bargaining and the Skill-Structure of Wages and Employment

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  • Kaiser, Ulrich
  • Pohlmeier, Winfried

Abstract

This paper presents structural estimates for a bargaining model which nests the right-to-manage, the efficient wage bargaining, the seniority and the standard neo- classical labor demand model as special cases. In contrast to most existing models, our approach accounts for heterogeneous skill groups which differ in terms of productivity and representation in the bargaining process through union preferences. The paper in- troduces the concept of `virtual' firms which allows us to (i) test the eÆcient contract model against models implying that firms operate on the labor demand curve and to (i) overcome a potential misspecification of firms' output markets. Estimates of structural parameters are obtained from a novel cross{section of German firms of the business related service sector which includes information on skill-specific wage rates at the firm level. Central results of this paper are that unions do care about both wages and employment in the bargaining process and that firms operate on the contract curve. The bargaining power of unions in East Germany turns out to be much weaker than in West Germany.

Suggested Citation

  • Kaiser, Ulrich & Pohlmeier, Winfried, 2000. "Efficient Bargaining and the Skill-Structure of Wages and Employment," CoFE Discussion Papers 00/24, University of Konstanz, Center of Finance and Econometrics (CoFE).
    • Handle: RePEc:zbw:cofedp:0024
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    References listed on IDEAS

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    Cited by:

    1. Thomas Ziesemer, 2003. "Information and Communication Technology as Technical Change in Matching and Production," Journal of Economics, Springer, vol. 79(3), pages 263-287, July.
    2. Kaiser Ulrich, 2000. "A Note on the Calculation of Firm-specific and Skill-specific Labor Costs from Firm-level Data / Zur Berechnung von qualifikations- und firmenspezifischen Arbeitskosten auf der Grundlage von Firmendat," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(5), pages 541-551, October.

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    More about this item

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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