Strategic Disclosure of Firm-Specific Skills in Wage Bargaining

Mumcu, Ayşe (1999): Strategic Disclosure of Firm-Specific Skills in Wage Bargaining. Unpublished.

Abstract

We study the bargaining relationship between a firm and its incumbent worker who possesses firm-specific human capital. We show that the worker's ability to disclose his skills strategically increases his bargaining power. The game may have inefficient equilibria where delays occur in real time. With the addition of outside options for both the firm and the worker, delays are shortened whenever outside options are credible threats. Our model also predicts that wages are procyclical, and there can be a variation in wages for a given job level.

• Item Type: MPRA Paper
• Institution: Bogazici University
• Language: English
• Keywords: bargaining; firm-specific skills
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory; Matching Theory; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.