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Changes in the Employment Contract? Evidence from a Quasi-Experiment

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  • Chaness, G.
  • Levine, D.I.

Abstract

Many authors have discussed an apparent shift to a new employment contract characterized by less commitment between employer and employee coupled with closer ties between wages within the enterprise and those in the external labor market. We study the issue of when people in the U.S. and Canada feel pay cuts are fair, comparing our results with those of Kahneman, Knetsch, and Thaler (1986). In contrast to much previous discussion, we find no evidence of increasing acceptance of pay cuts--a measure of whether external, not internal, labor markets are considered fair. These results suggest that new organizational forms might do well to preserve some of the features of the "old" employment contract.

Suggested Citation

  • Chaness, G. & Levine, D.I., 1999. "Changes in the Employment Contract? Evidence from a Quasi-Experiment," Papers 70, California Berkeley - Institute of Industrial Relations.
    • Handle: RePEc:fth:calbir:70
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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