International Competition in Hiring Labor and Selling Output - A Theoretical and Experimental Analysis

Siegfried K. Berninghaus, Werner Güth (), Christian Hoppe and Christian Paul

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: Two firms, firm A in country A and firm B in country B, compete in hiring two types of workers. Type 1-workers would be less productive when working abroad whereas type 2-workers are equally productive when working abroad or at home. Employers compete by offering employment contracts for both types of workers as well as for workers in both countries. Hiring determines output and thus the sales on the homogenous international sales market. We show that the scenario with firm A(B) hiring only workers from country A(B) is an equilibrium, i.e., there exists a parameter region with this equilibrium outcome. For our experiment with a specific parameter constellation we want to explore some qualitative hypotheses, related to this equilibrium scenario.

Pages: 49 pages
Date: 2007-03
New Economics Papers: this item is included in nep-exp and nep-hrm
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