Bargaining in the Labor Market

This paper examines the incidence and consequences of individual wage bargaining.  We collected survey data on the bargaining policies of more than 700 German firms.  Using these data, we validate a new survey measure of firm bargaining policies.  We then examine what drives heterogeneity in firm policies. Using the link between these data, administrative Social Security records, and a survey we fielded to 135,000 German workers, we examine the dynamics of bargaining in the labor market.  In the last part of the paper we examine the implications of individual-bargaining for wage inequality.  We also draw a link between individual specific pay premia and bargaining behavior.

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