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Wage posting or wage bargaining? Evidence from the employers' side

  • Brenzel, Hanna
  • Gartner, Hermann
  • Schnabel, Claus

Using a representative establishment dataset, this paper is the first to analyze the incidence of wage posting and wage bargaining in the matching pro-cess from the employer's side. We show that both modes of wage determination coexist in the German labor market, with about two-thirds of hirings being charac-terized by wage posting. Wage posting dominates in the public sector, in larger firms, in firms covered by collective agreements, and in part-time and fixed-term contracts. Job-seekers who are unemployed, out of the labor force or just finished their apprenticeship are also less likely to get a chance of negotiating. Wage bar-gaining is more likely for more-educated applicants and in jobs with special requirements as well as in tight regional labor markets.

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Paper provided by Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics in its series Discussion Papers with number 85.

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Date of creation: 2013
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Handle: RePEc:zbw:faulre:85
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  1. Gartner, Hermann & Schank, Thorsten & Schnabel, Claus, 2010. "Wage cyclicality under different regimes of industrial relations," IWQW Discussion Paper Series 07/2010, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  2. Ellingsen, Tore & Rosén, Åsa, 1997. "Fixed or Flexible? Wage Setting in Search Equilibrium," SSE/EFI Working Paper Series in Economics and Finance 185, Stockholm School of Economics.
  3. Sven Jung & Claus Schnabel, 2011. "Paying More than Necessary? The Wage Cushion in Germany," LABOUR, CEIS, vol. 25(2), pages 182-197, 06.
  4. Andreas Leibbrandt & John List, 2012. "Do women avoid salary negotiations? Evidence from a large-scale natural field experiment," Natural Field Experiments 00201, The Field Experiments Website.
  5. Robert E. Hall & Alan B. Krueger, 2012. "Evidence on the Incidence of Wage Posting, Wage Bargaining, and On-the-Job Search," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 56-67, October.
  6. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2001. "Nominal rigidities and the dynamic effects of a shock to monetary policy," Working Paper 0107, Federal Reserve Bank of Cleveland.
  7. Michelacci, Claudio & Suarez, Javier, 2002. "Incomplete Wage Posting," CEPR Discussion Papers 3658, C.E.P.R. Discussion Papers.
  8. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
  9. Acemoglu, Daron & Shimer, Robert, 1999. "Holdups and Efficiency with Search Frictions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 827-49, November.
  10. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.
  11. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
  12. Robert E. Hall & Alan B. Krueger, 2010. "Evidence on the Determinants of the Choice between Wage Posting and Wage Bargaining," NBER Working Papers 16033, National Bureau of Economic Research, Inc.
  13. Vera Brenčič, 2012. "Wage posting: evidence from job ads," Canadian Journal of Economics, Canadian Economics Association, vol. 45(4), pages 1529-1559, November.
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