Wage Premia, Price-Cost Margins and Bargaining Over Employment in Belgian Manufacturing : An Analysis of Distinct Behavior Among Various Skilled Workers

This model estimates an asymetric Nash efficient wage bargaining model for some Belgian manufacturing sectors at the firm level, under the premises that bargaining units are separate for 'R&D' people and other 'common' workers in order to account for 'wage rivalry' effects. The importance of R&D activity as a strategic use for firm growth is supported by higher bargaining power for 'R&D' people than for common labor, while 'R&D' people tend also to attach less importance to employment as compared to wages, possibly because of greater outside job opportunities. In addition, the bargaining power of either union group depends on (the fluctuation of) output market power (through the industry degree of utilization capacity and the level of industry concentration) and on the firm financial structure (through the level of debt). Further, skilled workers bargaining strength seems reduced by underinvestment in R&D activity in order for firms to reduce the revenues accruing from assets which are sunk at the time of negotiation. Finally some evidence of a 'wage-wage' spiral is found for some sectors, indicating that there is room for separate bargaining units to coordinate somewhat their claims and collusively increase their power to extract oligopolistic profits.