Insider Bargaining Power, Starting Wages, and Involuntary Unemployment

Nils Gottfries () and Tomas Sjöström
Additional contact information
Tomas Sjöström: Department of Economics, Postal: Pennsylvania State University, 610 Kern Building, University Park, PA 16802-3306, USA

No 1998:10, Working Paper Series from Uppsala University, Department of Economics

Abstract: Recent analyses of wage bargaining has emphasized the distinction between insiders and outsiders, yet one typically assumes that insiders and recently hired outsiders are paid the same wage. We consider a model where the starting wage for outsiders may be lower than the insider wage, but incentive constraints associated with turnover affect the form of the contract. We examine under what conditions the starting wage is linked to the insider wage so that increased bargaining power of insiders raises the starting wage and reduces hiring of outsiders.

Keywords: starting wage; bargain; seniority; unemployment (search for similar items in EconPapers)
JEL-codes: J23 J31 J33 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1998-04-16
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published in Scandinavian Journal of Economics, 2000, pages 669-688.

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Related works:
Journal Article: Insider Bargaining Power, Starting Wages and Involuntary Unemployment (2000)
Working Paper: Insider Bargaining Power, Starting Wages, and Involuntary Unemployment (1998)
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