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Title:Institutions, bargaining power and labor shares PDF Logo
Authors:Bental, Benjamin
Demougin, Dominique M.
Issue Date:2006
Series/Report no.:SFB 649 discussion paper 2006,009
Abstract:We use a static framework characterized by both moral hazard and holdup problems. In the model the optimal allocation of bargaining power balances these frictions. We examine the impact of improved monitoring on that optimal allocation and its impact upon effort, investment, profits and rents. The model's predictions are consistent with the recent evolution of labor shares, wages per efficiency units and the ratio of labor in efficiency units to capital in several OECD countries. The model suggests further that improvement in monitoring may also play a key role in understanding opposition to institutional reforms in the labor market.
Subjects:moral hazard
hold up
labor share
Document Type:Working Paper
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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