The organization of bargaining in Spanish firms

Abstract

A model of the detenninants of formal firm-level firm is proposed, and some of their implications are tested. The model analyses bargaining within a finn, when replacing teams of workers is costly. Workers have tlle choice of bargaining ex ante and collectively for the value of the firm (formal firm-level bargaining), orto bargain ex post and independently for tlleir marginal productivity (informal bargaining). Under the first of these choices, coordinated bargaining, workers cooperate with each other when negotiating with the finn. Under uncoordinated bargaining workers take as given the outcomes of ofüer workers' negotiations. The model points to characteristics that should predict the likelihood of formal firm-level bargaining, and shows its implications regarding wages and total surplus. In particular, the model points to firms' size as a leading determinant factor of finn-level bargaining. The main predictions of tllis model are tested empirically using Spanish firm-level data which combine information from collective bargaining statistics and from firms' balance sheets. Our main empírica! findings are: i) surplus per employee is lower in firms with formal firm-level bargaining, ii) conmilling for average surplus, number of employees and other variables, total payments to workers are higher and less correlated with füe surplus variable in firms with formal bargaining, iii) larger firms are more likely to develop formal finn-level bargaining; and iv) controlling for endogeneity bias, firms' size appears to increase the ability of workers to increase wages.