EconPapers    
Economics at your fingertips  
 

Equalizing Wage Differences and Bargaining Power: Evidence from a Panel of French Firms

Pierre Cahuc, Christian Gianella, Dominique Goux and Andre Zylberberg ()

No 582, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we develop a dynamic model of firm-level bargaining, along the lines of Manning (1993). In this context, we provide a firm level wage equation that explicitly accounts for firm heterogeneity. This wage equation explains inter-firm wage differentials by differences in labour productivity and job turnover. More precisely, our model predicts that the higher the rate of job destruction within one firm, the higher the compensation of workers. We estimate our wage equation using matched employer-employee panel data in the manufacturing sector, where firms are tracked for five years, between 1988 and 1992. The empirical estimates, using GMM techniques, are fully consistent with our theoretical prediction of equalizing differences: workers who take into account their intertemporal discounted income will support lower wages when they benefit from lower unemployment risks within their firm. In our model, wages are set to maximize a Nash bargain criterion, and according to the estimators used or the industry we consider, we show that workers have an average bargaining power between 0.15 and 0.25, measured on a scale going from 0 to 1.

Keywords: collective bargaining; equalizing wage differences (search for similar items in EconPapers)
JEL-codes: J33 J51 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2002-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34) Track citations by RSS feed

Downloads: (external link)
http://ftp.iza.org/dp582.pdf (application/pdf)

Related works:
Working Paper: Equalizing Wage Differences and Bargaining Power: Evidence from a Panel of French Firms (2002) Downloads
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:iza:izadps:dp582

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().

 
Page updated 2020-07-28
Handle: RePEc:iza:izadps:dp582