The Impact of Worker Bargaining Power on the Organization of Global Firms

52 Pages Posted: 7 Nov 2013

See all articles by Juan Carluccio

Juan Carluccio

Banque de France; Paris School of Economics

Maria Bas

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Date Written: November 2013

Abstract

We study the effect of worker bargaining power on global firms' boundaries. Our theory posits that outsourcing weakens the workers' bargaining position by limiting the revenues subject to worker extraction. Furthermore, when capital is relationship-specific, outsourcing reduces the firm's exposure to ex-post worker opportunism. Hence, worker bargaining power provides incentives for vertical fragmentation, and the more so in capital-intensive industries characterized by specific investments. Our empirical analysis relates global sourcing strategies to observable measures of worker bargaining power. We provide firm-level evidence consistent with the theoretical predictions.

Keywords: worker bargaining power, firm-boundaries, intra-firm trade

JEL Classification: F14, J51

Suggested Citation

Carluccio, Juan and Bas, Maria, The Impact of Worker Bargaining Power on the Organization of Global Firms (November 2013). Banque de France Working Paper No. 460, Available at SSRN: https://ssrn.com/abstract=2351142 or http://dx.doi.org/10.2139/ssrn.2351142

Juan Carluccio (Contact Author)

Banque de France ( email )

Paris
France

Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Maria Bas

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

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