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Market Power, Dismissal Threat, and Rent Sharing: the Role of Insider and Outsider Forces in Wage Bargaining

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Author Info

  • Anabela Carneiro

    ()
    (CETE, Faculdade de Economia, Universidade do Porto)

  • Pedro Portugal

    ()
    (Banco de Portugal and Universidade Nova de Lisboa)

Abstract

This study investigates wage determination at the firm level using a longitudinal panel of large firms in Portugal. The results revealed that insider forces such as revenue per employee and market share have a significant impact on wage determination. The results also showed that insider-outsider considerations seem to be empirically relevant in Portugal. That is, firms where insider workers seem to have more market power tend to pay higher wages. More specifically, in firms with low layoff rates, high proportion of permanent employees and high rates of labour utilization workers seem to be in a better position to extract rents in the form of higher wages.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 0403.

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Length: 23 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:por:cetedp:0403

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Keywords: wages; market power; dismissal threat; rent sharing; instrumental variables;

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References

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  1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
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  4. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
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  27. repec:iza:izadps:dp534 is not listed on IDEAS
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Citations

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Cited by:
  1. Monteiro, Natália Pimenta & Portela, Miguel & Straume, Odd Rune, 2010. "Firm Ownership and Rent Sharing," IZA Discussion Papers 4909, Institute for the Study of Labor (IZA).
  2. Pedro Portugal, 2006. "Wage Setting in the Portuguese Labor Market: A Microeconomic Approach," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  3. Sónia Torres & Pedro Portugal & John T. Addison & Paulo Guimarães, 2010. "The Sources of Wage Variation: An Analysis Using Matched Employer-Employee Data," Working Papers w201025, Banco de Portugal, Economics and Research Department.

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