Díaz-Vázquez, Pilar; Snower, Dennis J. - Kiel Institute for the World Economy - 2003
Do firms reduce employment when their insiders (established, incumbent employees) claim higher wages? The conventional … employees (entrants) receive their reservation wages. The reason given is that an increase in insider wages gives rise to a … countervailing fall in reservation wages, leaving the present value of wage costs unchanged. Our analysis contradicts this …
