Empirical studies find that the age-variance profile of wages is U-shaped. The objective of this paper is to explore the driving forces of the U-shape in a model with search frictions. I introduce endogenous search effort and a fixed retirement age into Cahuc, Postel-Vinay, and Robin s (2006)...

This paper indicates that the extent of collective bargaining coverage in an industry may depend on the differences in firms productivity levels within the industry. Less pronounced differences in productivity levels make it easier to design collective wage contracts that are accepted by a wider...

We study sequential bargaining between two unions and a single firm. Parties bargain bilaterally and efficiently (over wage and employment). The unions' workforces can be substitutable ("tariff competition") or complementary ("tariff plurality" or "craft unionism"). If unions are substitutable,...

This study empirically investigates the direct incidence of the corporate income tax through wage bargaining, using an industry-region level panel data set on all corporations in Germany over the period 1998 to 2006. Our measure of direct incidence for the first time accounts for employment...

Swedish unemployment was very low up to the early 1990s when it rose rapidly. At the same time manufacturing employment fell by more than 20 %. The decentralisation of wage bargaining that started in 1983 may have contributed to this by making employment more shock sensitive or by increasing...

We analyze optimal labor contracts when the worker is inequity averse towards the employer. Welfare is maximized for an equal sharing rule of surplus between the worker and the firm. That is, profit sharing is optimal even if effort is contractible. If the firm can make a take-it-or leave-it...