Abstract: How are wages determined and how do workers bit up their rents? We suggest a model in which wage posting and wage bargaining firms coexist. As a result, workers can increase rents through mobility within as well across firm types. The model features both efficient as well as inefficient E2E mobility and rationalizes E2E mobility events with wage decreases to destination firms of apparent lower quality. We estimate model parameters with Austrian matched employer-employee data as well as German firm data using a novel, unified estimation procedure based on firm exit rates. We find that firm productivity in our model correlates but is distinct from AKM fixed effects, poaching and page ranks of firms. The model accounts for about 50% of apparent downward mobility with wage decreases.



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