Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/193302 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 12008
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
In this paper we present a search and matching model in which firms invest in sunk capital equipment. By comparing two wage setting scenarios, we show that a two-tier bargaining scheme, where a fraction of the salary is negotiated at firm level, raises the amount of investment per worker in the economy compared to a one-tier bargaining scheme, in which earnings are entirely negotiated at sectoral level. The model's main result is consistent with the positive correlation between investment per worker and the presence of a two-tier bargaining agreement that we find in a representative sample of Italian firms.
Subjects: 
unions
investment
hold-up
two-tier bargaining
control function
JEL: 
J51
J64
E22
Document Type: 
Working Paper

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