It’s largely a method to prevent good workers from leaving. If you’re not good, and it doesn’t seem like you might leave, don’t count on bigger checks:
This paper studies the ex-ante effect of worker separations on wage negotiations using matched worker–firm data from The Netherlands. We find that wage negotiations aim to prevent separations; workers with a high propensity to quit are offered higher wages, while workers with a high layoff probability give up some of their wage.
Source; “Layoffs, quits and wage negotiations” from Economics Letters, Volume 109, Issue 2, November 2010, Pages 108-111
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