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Indexation and Incomes Policy: A Study of Wage Adjustment in Unionized Manufacturing

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  • Cecchetti, Stephen G

Abstract

Data from nearly 200 collective bargaining units are used to study the frequency of wage changes from 1957 to 1978. It is shown that in comes policies during the Kennedy, Johnson, and Nixon administrations encouraged changes in the length of time between wage adjustments. I nflation, often thought to be responsible for fluctuations in the co verage of indexing provisions, is found to play virtually no role. Th e conclusion is that government intervention in the wage-price proces s aroused fears that the government will intervene again in the futur e. In the presence of this uncertainty, the wage-adjustment provision s of collective bargaining contracts were changed. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Cecchetti, Stephen G, 1987. "Indexation and Incomes Policy: A Study of Wage Adjustment in Unionized Manufacturing," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 391-412, July.
  • Handle: RePEc:ucp:jlabec:v:5:y:1987:i:3:p:391-412
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    Cited by:

    1. Robert Amano & Tom Carter & Kevin Moran, 2012. "Inflation and Growth: A New Keynesian Perspective," Staff Working Papers 12-23, Bank of Canada.
    2. Philip Du Caju & Erwan Gautier & Daphne Momferatu & Melanie Ward-Warmedinger, 2009. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 12(2), pages 57-108, Winter.
    3. Sanvi Avouyi-Dovi & Denis Fougère & Erwan Gautier, 2013. "Wage Rigidity, Collective Bargaining, and the Minimum Wage: Evidence from French Agreement Data," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1337-1351, October.
    4. Christofides, Louis N. & Peng, Chen, 2006. "Contract duration and indexation in a period of real and nominal uncertainty," Labour Economics, Elsevier, vol. 13(1), pages 61-86, February.
    5. Peter J. Klenow & Oleksiy Kryvtsov, 2008. "State-Dependent or Time-Dependent Pricing: Does it Matter for Recent U.S. Inflation?," The Quarterly Journal of Economics, Oxford University Press, vol. 123(3), pages 863-904.
    6. Ekaterina V. Peneva, 2009. "Factor intensity and price rigidity: evidence and theory," Finance and Economics Discussion Series 2009-07, Board of Governors of the Federal Reserve System (U.S.).
    7. Hervé Le Bihan & Jérémi Montornès & Thomas Heckel, 2012. "Sticky Wages: Evidence from Quarterly Microeconomic Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 1-32, July.
    8. Steven Holland, 1994. "Inflation and Wage Indexation in the Postwar U.S," Macroeconomics 9402001, University Library of Munich, Germany.
    9. Flood, Robert P. & Hodrick, Robert J., 1986. "Real aspects of exchange rate regime choice with collapsing fixed rates," Journal of International Economics, Elsevier, vol. 21(3-4), pages 215-232, November.
    10. Peneva, Ekaterina, 2011. "Some evidence on factor intensity and price rigidity," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1652-1658, October.
    11. Graham, Liam & Snower, Dennis J., 2004. "The real effects of money growth in dynamic general equilibrium," Working Paper Series 412, European Central Bank.
    12. Patrick Lünnemann & Ladislav Wintr, 2009. "Wages are flexible, aren?t they? evidence from monthly micro wage data," BCL working papers 39, Central Bank of Luxembourg.
    13. M. Ali Choudhary & Saima Mahmood & Sajawal Khan & Waqas Ahmed & Gylfi Zoega, 2013. "Sticky Wages in a Developing Country: Lessons from Structured Interviews in Pakistan," School of Economics Discussion Papers 0213, School of Economics, University of Surrey.
    14. Carlsson, Mikael & Westermark, Andreas, 2007. "Optimal Monetary Policy under Downward Nominal Wage Rigidity," Working Paper Series 2007:15, Uppsala University, Department of Economics.
    15. Amano, Robert & Moran, Kevin & Murchison, Stephen & Rennison, Andrew, 2009. "Trend inflation, wage and price rigidities, and productivity growth," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 353-364, April.
    16. repec:dau:papers:123456789/11159 is not listed on IDEAS
    17. Selien De Schryder & Gert Peersman & Joris Wauters, 2014. "Wage Indexation and the Monetary Policy Regime," CESifo Working Paper Series 5107, CESifo Group Munich.
    18. Jósef Sigurdsson & Rannveig Sigurdardottir, 2011. "Evidence of Nominal Wage Rigidity and Wage Setting from Icelandic Microdata," Economics wp55, Department of Economics, Central bank of Iceland.
    19. Laurence Ball & Stephen G. Cecchetti, 1989. "Wage Indexation and Time-Consistent Monetary Policy," NBER Working Papers 2948, National Bureau of Economic Research, Inc.

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