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http://hdl.handle.net/10419/58840
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| Title: | | Rent-sharing, hold-up, and wages: Evidence from matched panel data  |
| Authors: | | Card, David Devicienti, Francesco Maida, Agata |
| Issue Date: | | 2011 |
| Series/Report no.: | | Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6086 |
| Abstract: | | It is widely believed that rent-sharing reduces the incentives for investment when long term contracts are infeasible because some of the returns to sunk capital are captured by workers. We propose a simple test for the degree of hold-up based on the fraction of capital costs that are deducted from the quasi-rent that determines negotiated wages. We implement the test using a data set that combines Social Security earnings records for workers in the Veneto region of Italy with detailed financial information for employers. We find strong evidence of rent-sharing, with an elasticity of wages with respect to current profitability of the firm of 3-7%, arising mainly from firms in concentrated industries. On the other hand we find little evidence that bargaining lowers the return on investment. Instead, firm-level bargaining appears to split the rents after deducting the full cost of capital. |
| Subjects: | | rent-sharing hold-up employer-employee data |
| JEL: | | J31 |
| Persistent Identifier of the first edition: | | urn:nbn:de:101:1-201111213134 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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