Financing Skilled Labor

WFA 2019 Meetings Paper

53 Pages Posted: 7 Aug 2018 Last revised: 29 May 2020

See all articles by Vladimir Vladimirov

Vladimir Vladimirov

University of Amsterdam Business School; Centre for Economic Policy Research (CEPR)

Date Written: May 28, 2020


Skilled workers often have strong bargaining positions in compensation negotiations. This paper studies the implications for firm financing, workers' compensation structure, and turnover. There are three main insights. First, workers in strong bargaining positions demand equity-based compensation. While individually optimal, such compensation increases workers' incentives to leave when other key workers are leaving. Second, firms can reduce contagious departures by securing credit lines and offering fixed wages. Third, the paper shows an efficient way for workers to play firms making different types of compensation offers against each other. The evidence supports the predicted relation between bargaining power and compensation structure.

Keywords: financing wages, wage structure of non-executive employees, worker runs, worker bargaining power, noncompetition agreements

JEL Classification: G32, M52, J54, J33

Suggested Citation

Vladimirov, Vladimir, Financing Skilled Labor (May 28, 2020). WFA 2019 Meetings Paper, Available at SSRN: or

Vladimir Vladimirov (Contact Author)

University of Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018WB

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

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