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The Spot Market Matters: Evidence on Implicit Contracts from Britain Author info | Abstract | Publisher info | Download info | Related research | Statistics Devereux, Paul J. (UCLA and IZA Bonn)
Hart, Robert A. () (University of Stirling and IZA Bonn)
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Based on the methodology of Beaudry and DiNardo (1991), this paper investigates the relative importance of the spot market and implicit contracts in the determination of British real wages. Empirical work is carried out separately for males and females with individuallevel data taken from the New Earnings Survey Panel for the years 1976 to 2001. In contrast to previous studies that used North American data, the spot market is found to be more important than implicit contracts in determining real wages. Indeed, there is very little support for implicit contracts in these data. Further evidence is provided through the analysis of individual wage sequences. These suggest that the downwardly rigid wage sequences implied by implicit contracts with costless worker mobility are not prevalent in Britain.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
1497.
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Length: 34 pages
Date of creation: Feb 2005Date of revision:
Handle: RePEc:iza:izadps:dp1497Contact details of provider: Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany Phone: +49 228 3894 223 Fax: +49 228 3894 180 Web page: http://www.iza.org
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Keywords: spot market wages ; implicit contracts ; unemployment ; wage sequences ; Other versions of this item:
Find related papers by JEL classification: E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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