Uncertainty and Labor Contract Durations

50 Pages Posted: 12 Jun 2000 Last revised: 18 Oct 2010

See all articles by Robert W. Rich

Robert W. Rich

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Joseph S. Tracy

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

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Date Written: June 2000

Abstract

This paper provides an empirical investigation into the relationship between ex ante U.S. labor contract durations and uncertainty over the period 1970 to 1995. We construct measures of inflation uncertainty as well as aggregate nominal and real uncertainty. The results not only corroborate previous findings of an inverse relationship between contract duration and inflation uncertainty, but document that this relationship extends to both measures of aggregate uncertainty. We also explore the robustness of this relationship to the various measures of inflation uncertainty that have appeared in the literature.

Suggested Citation

Rich, Robert W. and Tracy, Joseph, Uncertainty and Labor Contract Durations (June 2000). NBER Working Paper No. w7731. Available at SSRN: https://ssrn.com/abstract=232113

Robert W. Rich

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

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