Accounting and Finance Seminar - Vladimir Vladimirov (Amsterdam)

23 October 2019, 1.00 PM - 23 October 2019, 2.15 PM

Vladimir Vladimirov

G.15, 15-19 Tyndalls Park Road

Financing Skilled Labor


This paper studies how competition for skilled workers a¤ects how firms structure and finance workers' compensation. Workers' compensation structure has externalities for co-workers and firms, as it affects the risk of subsequent "worker runs" (workers leaving because others are leaving). It results from negotiations in which workers may struggle to compare di¤erent types of compensation o¤ers. If competition for skilled labor empowers workers to dictate terms, workers demand equity-based compensation, effectively, self-financing their compensation. Otherwise, ...firms offer fixed wages that they back by external financing. Both cases entail ineffiencies. The model explains
evidence relating compensation structure to worker bargaining power.

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