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Firms' debt and finite-horizon wage bargaining

By Alberto Dalmazzo

Abstract

The simple bargaining mode presented here analyses the effect of a predetermined level of debt repayment commitments on the wage bargaining process between a firm and its workforce. Even if the bargaining process between a firm and its workforce. Even if the bargaining structure is basically derived from Rubinstein (1982), the presence of debt''s interests maturing over time is shown to imply finiteness in the bargaining horizon. The main consequence is that, in contrast with Rubinstein (1982), the parties'' outside options always enter the perfect equilibrium payoffs, justifying their presence in the econometric specifications

Topics: HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 1991
OAI identifier: oai:eprints.lse.ac.uk:21075
Provided by: LSE Research Online
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