Level Bargaining (joint with Wilbur Townsend)

Many firms set wages by defining a discrete set of positions; insofar as such firms bargain with their workers,
that bargaining is over which position the worker will hold. We present a bargaining model in which the firm can
restrict the set of possible wages before bargaining with any particular worker. We show it is profit-maximizing
for a firm to foreclose the bargaining space in this manner whenever workers’ bargaining weights are sufficiently
high. This behavior generally distorts the allocation of labor across firms, though not when a worker’s reservation
wage is an increasing function of their productivity.