Bargaining with Commitment Between Workers and Large Firms

William Hawkins

Review of Economic Dynamics, 2015, vol. 18, issue 2, 350-364

Abstract: study the efficiency of search equilibrium under decreasing returns to labor in production. Firms can sign long-term contracts with their workers which give them incentives to maximize the joint surplus associated with their relationship. When the firm hires a new worker, the terms of the contract are determined by bargaining over the marginal surplus. Long-term contracts solve the over-hiring problem identified by previous authors. However, the equilibrium is still not constrained efficient because large, low productivity firms search too intensively relative to small, high productivity firms. This potentially provides a novel justification for subsidizing vacancy creation by young, small firms. (Copyright: Elsevier)

Keywords: Bargaining; Random search; Multi-worker firms; Efficiency (search for similar items in EconPapers)
JEL-codes: E24 J31 J64 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2014.06.003
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.

Related works:
Working Paper: Online Appendix to "Bargaining with Commitment Between Workers and Large Firms" (2014)
Working Paper: Bargaining with Commitment between Workers and Large Firms (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:issued:12-114

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2014.06.003

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().