The Observational Implications of Labor Contracts in a Dynamic General Equilibrium Model
Journal of Labor Economics
1988
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 this way potentially allows us to reconcile several ostensibly anomalous aspects of the data with equilibrium theory.
- DOI
- 10.1086/298195
- Volume
- 6 (4)
- Pages
- 530-551
- Language
- en
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- Sources
- openalex crossref