Uniform and nonuniform staggering of wage contracts

Leif Danziger

doi:10.1016/j.labeco.2010.05.002

Uniform and nonuniform staggering of wage contracts

Leif Danziger

Department of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

This paper provides a model that can account for the almost uniform staggering of wage contracts in some countries as well as for the markedly nonuniform staggering in others. In the model, short and long contracts as well as long contracts concluded in different periods are strategic substitutes, which provide a powerful rationale for staggering. We show that for realistic parameter values, there is a continuum of possible equilibria with various degrees of staggering of long contracts. If the contracting cost is not too large, then the lowest possible degree of staggering decreases with the contracting cost and increases with monetary uncertainty.

Original language	English
Pages (from-to)	1038-1049
Number of pages	12
Journal	Labour Economics
Volume	17
Issue number	6
DOIs	https://doi.org/10.1016/j.labeco.2010.05.002
State	Published - 1 Dec 2010

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 17 Partnerships for the Goals

Keywords

Contract duration
Monetary policy shocks
Nonuniform staggering
Strategic substitutability
Uniform staggering
Wage contracts

ASJC Scopus subject areas

Economics and Econometrics
Organizational Behavior and Human Resource Management

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10.1016/j.labeco.2010.05.002

Cite this

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AB - This paper provides a model that can account for the almost uniform staggering of wage contracts in some countries as well as for the markedly nonuniform staggering in others. In the model, short and long contracts as well as long contracts concluded in different periods are strategic substitutes, which provide a powerful rationale for staggering. We show that for realistic parameter values, there is a continuum of possible equilibria with various degrees of staggering of long contracts. If the contracting cost is not too large, then the lowest possible degree of staggering decreases with the contracting cost and increases with monetary uncertainty.

KW - Contract duration

KW - Monetary policy shocks

KW - Nonuniform staggering

KW - Strategic substitutability

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KW - Wage contracts

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ER -

Uniform and nonuniform staggering of wage contracts

Abstract

UN SDGs

Keywords

ASJC Scopus subject areas

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