Journal of Political Economy Vol. 94 No. 3, Part 2 1986
An Empirical Model of Wage Indexation Provisions in Union Contracts
open access
Abstract
Cost of living escalators are an important feature of North American labor contracts. This paper presents a measure of the response of indexlinked wage increases to concurrent price increases for a sample of Canadian contracts, and then analyses this response in terms of a simple model of indexation to the aggregate price level. The model highlights the importance of aggregate price movements in conveying information about industryspecific prices. The empirical analysis confirms that industry-specific correlations between input and output prices and the Consumer Price Index are important determinants of the response of wage to prices across index contracts.
- DOI
- 10.1086/261402
- Volume
- 94
- Issue
- 3, Part 2
- Pages
- S144-S175
- Language
- en
- Sources
- openalex crossref