Wages, Hours and Human Capital Over the Life Cycle
44 Pages Posted: 23 Jun 2000
Date Written: March 2000
We investigate wage-hours contracts within a four-period rent sharing model that incorporates asymmetric information. Distinctions are made among (a) an investment period, (b) a period in which the parties may separate (quits or layoffs) or continue rent accumulation and sharing, (c) a post investment period, and (d) retirement. We establish that increases in both wage rates and hours of work in the post-investment period serve to minimise sub-optimal separations and, moreover, that both wage and hours schedules are concave. The model is tested with the British Household Panel Survey (1991-1997) and with the British Labour Force Survey (1993/4).
Keywords: Lifetime wage-hours contracts, asymmetric information, estimated wage- and hour-tenure profiles
JEL Classification: J41, J33
Suggested Citation: Suggested Citation