The Interaction between Indexation, Contract Duration and Non-Contingent Wage Adjustment

Christofides, Louis N.

doi:10.2307/2554942

Cited by 33 publications

(50 citation statements)

References 20 publications

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“…In that case, a higher rather than lower delay incidence would have been associated with increased real uncertainty. Support for the present theory is also provided by the empirical literature on contract duration that finds that contract duration decreases with nominal uncertainty (e.g., Christofides, 1990) and increases with real uncertainty (e.g., Wallace and Blanco, 1991).…”

supporting

confidence: 65%

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Extension of labor contracts and optimal backpay

Danziger

2008

Labour Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Extension of Labor Contracts and Optimal BackpayLeif Danziger The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ABSTRACT Extension of Labor Contracts and Optimal BackpayThis paper explains why a union and a firm might settle on a contract duration that may later be extended and characterizes the optimal backpay for the holdout period. It is shown that the choice between concluding a shorter contract that may be extended and immediately concluding a longer contract depends on the prevalence of the different types of uncertainty in the economy. It is also shown that the optimal backpay reduces the negative impact of nominal uncertainty on a worker's real income, but increases the worker's exposure to idiosyncratic uncertainty.JEL Classification: J41

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supporting

confidence: 65%

“…The same is true of empirical analyses of contract durations which likewise neglect to take extensions into account (Christofides and Wilton, 1983;Ehrenberg et al, 1984;Vroman, 1989;Christofides, 1990;Murphy, 1992 and2000;Wallace and Blanco, 1991;Wallace, 2001;Rich and Tracy, 2004;and Christofides and Peng, 2006).…”

mentioning

confidence: 92%

Extension of labor contracts and optimal backpay

Danziger

2008

Labour Economics

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“…5 This is different from the case of DNWR where the extent of nominal wage cuts diminishes as the magnitude of DNWR increases, and there are no nominal wage cuts when there is absolute DNWR. The case of absolute DRWR is visualised in the leftmost graph of the bottom row of 4 McLaughlin(1999) in a paper that investigates the presence of DNWR alone, finds evidence of skewness that extends beyond zero. This is consistent with the presence of DRWR.…”

Section: Downward Wage Rigidity and Wage Growth Distributionsmentioning

confidence: 99%

“…These observations have been excluded, leaving 10945 observations for our working sample. 11 The nature, incidence, and intensity of COLA clauses and their implications, particularly for modelling wage adjustment, are analyzed in, inter alia, Card (1983Card ( ,1986), Christofides (1987Christofides ( ,1990), Cousineau, Lacroix and Bilodeau (1983), Ehrenbrerg, Danziger and San (1984), Hendricks and Kahn (1985), Kaufman and Woglom (1984), Mitchell (1980), and Vroman (1984). 12 Because of the smaller number of contracts, the first two and the last three years in the sample are considered together in everything that follows.…”

Section: Data and Sourcesmentioning

confidence: 99%

Real and nominal wage rigidities in collective bargaining agreements

Christofides

Nearchou

2007

Labour Economics

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An earlier study of wage agreements, reached in the Canadian unionized sector between 1976-99, found that wage adjustment is characterized by downward nominal rigidity and significant spikes at zero. We extend this earlier approach to encompass the possibility of real as well as nominal wage rigidity. The addition of real wage rigidity variables enhances earlier results and suggests that real rigidity increases significantly the mass in the histogram bin containing the mean expected rate of inflation, as well as in adjacent bins. Downward nominal wage rigidities and spikes at zero remain important.JEL Classification: J52,J31

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“…This number constitutes a lower bound on the proportion of the labour force covered by similar agreements because the data set used does not include agreements involving less than 200 employees. 12 The nature, incidence, and intensity of COLA clauses and their implications, particularly for modelling wage adjustment, are analyzed in, inter alia, Card (1983Card ( ,1986), Christofides (1987Christofides ( ,1990),…”

Section: Data Sourcesmentioning

confidence: 99%