The Observational Implications of Labor Contracts in a Dynamic General Equilibrium Model
AbstractEconomies are studied where labor contracts, even without changing real allocations, can make equilibria appear different. One basic example is that wage observations generated by long-term employment contracts are biased measures of theoretical market wages. This idea is analyzed in a dynamic, stochastic, economic model, including both overlapping generations of finite-lived workers and infinite-horizon employers, so that the implications for business cycle, life cycle, and cross-sectional phenomena can be explicitly addressed. Understanding contracts in thi s way potentially allows one to reconcile several ostensibly anomalous aspects of the data with equilibrium theory. Copyright 1988 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Labor Economics.
Volume (Year): 6 (1988)
Issue (Month): 4 (October)
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- Gomme, P. & Greenwood, J., 1993.
"On the Cyclical Allocation of Risk,"
RCER Working Papers
355, University of Rochester - Center for Economic Research (RCER).
- Paul Gomme & Jeremy Greenwood, 1992. "On the cyclical allocation of risk," Discussion Paper / Institute for Empirical Macroeconomics 71, Federal Reserve Bank of Minneapolis.
- Gomme, P. & Greenwood, J., 1992. "On the Cyclical Allocation of Risk," UWO Department of Economics Working Papers 9205, University of Western Ontario, Department of Economics.
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