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Strategic Withholding Of Firm‐Specific Skills In Wage Bargaining

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  • Ayşe Mumcu

Abstract

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.

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  • Ayşe Mumcu, 2010. "Strategic Withholding Of Firm‐Specific Skills In Wage Bargaining," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 187-211, May.
    • Handle: RePEc:bla:scotjp:v:57:y:2010:i:2:p:187-211
    DOI: 10.1111/j.1467-9485.2010.00513.x
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    Cited by:

    1. Cheng-Feng Cheng, 2012. "Evaluate the Effectiveness of Manager Compensation," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 11(1), pages 25-44, June.

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