Improved outside options lead to higher wages for top earners.
The study tested whether wages in jobs are set through posting or bargaining. They looked at people with two jobs in Washington State to see how changes in wages affected their pay and job changes. In lower-paying jobs, better job options led to more people leaving their jobs but not to higher wages. In higher-paying jobs, better options led to higher wages but not more job changes. Overall, bargaining doesn't have a big impact on how wages are set.