Bargaining and Inequality in the Labor Market

Sydnee Caldwell, Ingrid Hägele and Jörg Heining
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Sydnee Caldwell: University of California at Berkeley & National Bureau of Economic Research (NBER)
Ingrid Hägele: Ludwig-Maximilians Universität München und Institut für Arbeitsmarkt- und Berufsforschung (IAB)
Jörg Heining: Institute for Employment Research (IAB), Nuremberg, Germany

No 202502, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "We use novel surveys of firms and workers, linked to administrative employer-employee data, to study the prevalence and importance of individual bargaining in wage determination. We show that simple survey questions accurately elicit firms’ bargaining strategies. Using the elicited strategies for 772 German firms, we document that the majority of firms are willing to engage in individual wage bargaining. Labor market factors predict firms’ strategies better than firm characteristics. Survey responses from nearly 10,000 full-time workers indicate that most worker-firm interactions begin with the worker providing their salary expectations. Most interactions end with the worker rejecting the offer and remaining at the incumbent firm. There is substantial heterogeneity in workers’ bargaining behavior, which translates into within-firm wage inequality. Firms that set pay via individual bargaining have a 3 percentage point higher gender wage gap." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; IAB-Open-Access-Publikation; Auswirkungen; Beschäftigerverhalten; Bewerbungsverhalten; Einkommenserwartung; geschlechtsspezifische Faktoren; IAB-Betriebs-Historik-Panel; Individualisierung; Integrierte Erwerbsbiografien; Integrierte Erwerbsbiografien; Lohnfindung; Lohnpolitik; Lohnstruktur; Lohnunterschied; Tarifverhandlungen; Unternehmen; Arbeitsuchende; 2021-2022 (search for similar items in EconPapers)
JEL-codes: J30 J31 J42 (search for similar items in EconPapers)
Pages: 155 pages
Date: 2025-02-24
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https://doi.org/10.48720/IAB.DP.2502

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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:202502

DOI: 10.48720/IAB.DP.2502

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