Diaz-Vazquez, Pilar; Snower, Dennis J. - C.E.P.R. Discussion Papers - 2002
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 … counterveiling fall in reservation wages, leaving the present value of wage costs unchanged. Our analysis contradicts this …