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The Observational Implications of Labor Contracts in a Dynamic General Equilibrium Model

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  • Wright, Randall D

Abstract

Economies 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.

Suggested Citation

  • Wright, Randall D, 1988. "The Observational Implications of Labor Contracts in a Dynamic General Equilibrium Model," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 530-551, October.
  • Handle: RePEc:ucp:jlabec:v:6:y:1988:i:4:p:530-51
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    Cited by:

    1. Gomme, Paul & Greenwood, Jeremy, 1995. "On the cyclical allocation of risk," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 91-124.
    2. Boldrin, Michael & Horvath, Michael, 1995. "Labor Contracts and Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 972-1004, October.
    3. Danthine, J.P. & Donaldson, J.B., 1990. "Risk Sharing, Time Minimum Wage and the Business Cycle," Papers fb-_91-10, Columbia - Graduate School of Business.
    4. repec:eee:labchp:v:3:y:1999:i:pb:p:2291-2372 is not listed on IDEAS
    5. Keshab Bhattarai, 2016. "Growth and Income Distributions in Four EU Economies," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(3), pages 263-277, August.
    6. Keshab Raj BHATTARAI, "undated". "Dynamic Multi-Household General Economic Models for Policy Simulations: France, Germany, Spain and UK," EcoMod2009 21500014, EcoMod.

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