Arbeitspapier

Capital structure, wage bargaining and employment

to connected objects

We offer a unified framework to analyze the determination of employment, employee effort, wages, profit sharing and capital structure when firms face stochastic revenue shocks.We apply a generalized Nash bargaining solution, which extends the wage bargaining literature by incorporating efficiency wage considerations, profit sharing and capital structure.The profit sharing instrument is demonstrated to have positive effort-augmenting and wage-moderating effects, which exactly offset the negative dilution effect in equilibrium.Leverage is shown to reduce employment and to have a strategic commitment value as a wage-moderating mechanism for firms facing unions in bilateral wage negotiations.Finally, some implications for equilibrium unemployment are discussed.

ISBN: 951-686-681-6

Language: Englisch

Bibliographic citation: Series: Bank of Finland Discussion Papers ; No. 16/2000

Classification: Wirtschaft

Subject: wage bargaining
profit sharing
capital structure
employment

Event: Geistige Schöpfung

(who): Koskela, Erkki
Stenbacka, Rune

Event: Veröffentlichung

(who): Bank of Finland

(where): Helsinki

(when): 2000

Handle: http://hdl.handle.net/10419/211870

Last update: 10.03.2025, 11:44 AM CET

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Object type

Arbeitspapier

Associated

Koskela, Erkki
Stenbacka, Rune
Bank of Finland

Time of origin

2000

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