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STRATEGIC WITHHOLDING OF FIRM‐SPECIFIC SKILLS IN WAGE BARGAINING
Author(s) -
Mumcu Ayşe
Publication year - 2010
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/j.1467-9485.2010.00513.x
Subject(s) - negotiation , bargaining power , economics , wage bargaining , wage , microeconomics , labour economics , human capital , power (physics) , capital (architecture) , market economy , physics , archaeology , quantum mechanics , political science , law , history
The bargaining relationship between a firm and its incumbent worker who possesses firm‐specific human capital is examined. It is shown that the worker's ability to withhold his/her skills strategically increases his/her bargaining power. Multiple efficient as well as inefficient equilibria involving delays in negotiation are characterized. When the firm has outside options, the range of both efficient and inefficient equilibria shrinks; moreover, delays are shortened in inefficient equilibria. The model predicts that wages are procyclical.