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Wage Dynamics, Cohort Effects, and Limited Commitment Models

Author

Listed:
  • Pedro Martins

    (Queen Mary, University of London,)

  • Andy Snell

    (University of Edinburgh,)

  • Jonathan P. Thomas

    (University of Edinburgh,)

Abstract

In this paper we analyse a model in which firms cannot pay discriminate based on year of entry to the firm, and argue that the wage dynamics are consistent with the empirical results of Beaudry and DiNardo (1991). Their results have been interpreted as supporting a model in which workers are ex post mobile. Since in our model worker mobility/commitment does not affect the optimal contract, it is argued that existing empirical research does not discriminate between different models of worker commitment. (JEL: E32, J41) Copyright (c) 2005 The European Economic Association.

Suggested Citation

  • Pedro Martins & Andy Snell & Jonathan P. Thomas, 2005. "Wage Dynamics, Cohort Effects, and Limited Commitment Models," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 350-359, 04/05.
    • Handle: RePEc:tpr:jeurec:v:3:y:2005:i:2-3:p:350-359
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    Citations

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    Cited by:

    1. Pedro Martins & Andy Snell & Jonathan Thomas, 2010. "Minu, Startu and all that:- Pitfalls in estimating the sensitivity of a worker's wage to aggregate unemployment," Edinburgh School of Economics Discussion Paper Series 199, Edinburgh School of Economics, University of Edinburgh.
    2. Jonathan Thomas & Andy Snell, 2007. "Real and Nominal Wage Rigidity in a Model of Equal-Treatment Contracting," CDMA Conference Paper Series 0708, Centre for Dynamic Macroeconomic Analysis.
    3. Martins, Pedro & Snell, Andy & Thomas, Jonathan, 2010. "Minu, Startu and all that:- Pitfalls in estimating the sensitivity of a worker’s wage to aggregate unemployment," SIRE Discussion Papers 2010-109, Scottish Institute for Research in Economics (SIRE).

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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