Decentralized Wage Bargaining Boosts Firm Flexibility, Efficiency Wages
This study delves into how companies decide whether to negotiate wages centrally or separately with their employees. It looks at why some firms prefer individual negotiations rather than group discussions, and whether this trend has changed over time. Using a model that considers how worker performance affects wages, the researchers explore factors that influence companies' bargaining approaches. They discover conditions that lead firms to choose decentralized negotiations, uncover traits of companies leaning towards individual bargaining, and analyze if more firms are moving towards separate wage talks. In essence, the study sheds light on the choices businesses make when it comes to wage bargaining and hints at a shift towards more decentralized negotiations over time.