Unions, Two-Tier Bargaining and Physical Capital Investment: Theory and Firm-Level Evidence from Italy

Gabriele Cardullo, Maurizio Conti and Giovanni Sulis ()

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: In this paper we present a search and matching model in which firms invest in sunk capital equipment. By comparing two wage setting scenarios, we show that a two-tier bargaining scheme, where a fraction of the salary is negotiated at firm level, raises the amount of investment per worker in the economy compared to a one-tier bargaining scheme, in which earnings are entirely negotiated at sectoral level. The model's main result is consistent with the positive correlation between investment per worker and the presence of a two-tier bargaining agreement that we find in a representative sample of Italian firms.

Keywords: unions; investment; hold-up; Two-Tier Bargaining; Control Function (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-bec, nep-dge and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Unions, Two-Tier Bargaining and Physical Capital Investment: Theory and Firm-Level Evidence from Italy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cns:cnscwp:201812

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