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Testing For Contracting Effects On Employment

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  • BILS, M.

Abstract

I test for the importance of wage rigidities from long-term contracts by observing how employment responds when firms and workers recontract. If rigidities are important, then employment should adjust after recontracting to partially undo its movements during the past contract. I examine twelve manufacturing industries that display a strong bargaining pattern. I find employment does rebound after recontracting, particularly in motor vehicles. This implies that contract rigidities are important. I also find responses in wage growth at the beginning of new contracts; but these responses are not related to the pattern of employment responses across industries.
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Suggested Citation

  • Bils, M., 1989. "Testing For Contracting Effects On Employment," RCER Working Papers 174, University of Rochester - Center for Economic Research (RCER).
    • Handle: RePEc:roc:rocher:174
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    Cited by:

    1. Andrew Charlton, 2003. "Nominal Wage Rigidity in The Australian Labour Market: Evidence from household Data," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(1), pages 25-36, March.
    2. Ghosal, Vivek & Loungani, Prakash, 1996. "Evidence on Nominal Wage Rigidity from a Panel of U.S. Manufacturing Industries," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 650-668, November.
    3. 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.
    4. Wallace, Frederick H, 2001. "The Effects of Shock Size and Type on Labor-Contract Duration," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 658-681, July.

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