Bargaining and Inequality in the Labor Market

Sydnee Caldwell, Ingrid Haegele and J?rg Heining
Additional contact information
Sydnee Caldwell: University of California-Berkeley and NBER
Ingrid Haegele: LMU and IAB
J?rg Heining: IAB

No 25-413, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

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 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.

Keywords: wage bargaining; employer-employee; Germany; wage inequality; gender wage gap (search for similar items in EconPapers)
JEL-codes: D83 J31 J41 J53 L21 (search for similar items in EconPapers)
Date: 2025-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://research.upjohn.org/cgi/viewcontent.cgi?ar ... ext=up_workingpapers (application/pdf)
This material is copyrighted. Permission is required to reproduce any or all parts.

Related works:
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:upj:weupjo:25-413

Access Statistics for this paper

More papers in Upjohn Working Papers from W.E. Upjohn Institute for Employment Research 300 S. Westnedge Ave. Kalamazoo, MI 49007 USA. Contact information at EDIRC.
Bibliographic data for series maintained by ().