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Bilateral Bargaining: The Case of Firms and Workers in Denmark

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  • Bjarne Brendstrup, Denmark
  • Johan Moritz Kuhn, Denmark
  • Harry J. Paarsch, University of Iowa, United States
  • http://www.asb.dk/omos/institutter/departmentofeconomics/
  • http://www.asb.dk/forskning/forskningscentreoggrupper/forskningscentre/ccpcenterforcorporateperformance/

We employ a simple two-person bargaining model to interpret wage data-demands(offers) by workers (firms) and acceptances by firms (workers). Under two polarextremebargaining solutions, we develop a strategy to recover estimates of themarginal-productivity and the opportunity-cost distributions. We then implementthis framework using particularly rich data from a sample of Danish firms and workers.Subsequently, we use our estimates to measure the cost of the inefficiencies that arisefrom the bilateral-monopoly problem under the two alterative bargaining solutions.

Original languageEnglish
JournalApplied Economics Research Bulletin
Volume2
Issue1, Marts
Pages (from-to)221-242
Publication statusPublished - 2008

    Research areas

  • Bilateral bargaining, Labour contracts

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