New evidence on implicit contracts from linked employer-employee data
AbstractWe improve the precision of the test of the implicit contract model that Beaudry and DiNardo proposed twenty years ago. Our data set allows us to define the precise industry and plant of a particular employment relationship, link local labour market characteristics and company characteristics to the individual level of wages, and control for composition effects. We find evidence in favour of the spot market model of wage setting in the whole sample, but there is significant variation across industries and educational levels. In particular, the spot market matters most for low-skill workers, while the implicit contract model with one-sided limited commitment applies better to high-skill workers.
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Bibliographic InfoPaper provided by Bank of Finland in its series Research Discussion Papers with number 12/2010.
Length: 26 pages
Date of creation: 28 Apr 2010
Date of revision:
wage cyclicality; limited commitment; match-specific fixed effects;
Other versions of this item:
- Juha Kilponen & Torsten Santavirta, 2010. "New Evidence on Implicit Contracts from Linked Employer-Employee Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(4), pages 864-883, December.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-15 (All new papers)
- NEP-BEC-2010-05-15 (Business Economics)
- NEP-LAB-2010-05-15 (Labour Economics)
- NEP-MAC-2010-05-15 (Macroeconomics)
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- BELLOU Andriana & KAYMAK Baris, 2011.
"Wages, Implicit Contracts, and the Business Cycle: Evidence from a European Panel,"
CEPS/INSTEAD Working Paper Series
- Bellou, Andriana & Kaymak, Barış, 2012. "Wages, implicit contracts, and the business cycle: Evidence from a European panel," Labour Economics, Elsevier, vol. 19(6), pages 898-907.
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