Wage bargaining or wage posting? Evidence from the employers' side

• We show that wage bargaining and wage posting coexist in the German labor market.
• More than one-third of hirings are characterized by individual wage bargaining.
• Bargaining is more likely for more-educated applicants and in tight labor markets.
• Posting dominates in the public sector and in firms with collective agreements.
• Employers are less likely to negotiate with applicants from non-employment.

Using a representative establishment dataset, this paper is the first to analyze the incidence of wage bargaining and wage posting in the matching process from the employers' side. We show that both modes of wage determination coexist in the German labor market, with more than one-third of hirings being characterized by individual wage negotiations. Wage bargaining is more likely for more-educated applicants, for jobs with special requirements, and in tight regional labor markets. Wage posting (in the sense of a fixed offer) dominates in the public sector, in larger firms, in firms covered by collective bargaining agreements, and in jobs involving part-time and fixed-term contracts. Job seekers who are unemployed, out of the labor force or have just finished an apprenticeship are also less likely to have a chance to negotiate.