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.
IAB-Discussion Paper 2/2025: Bargaining and Inequality in the Labor Market