Wages, Hours and Human Capital Over the Life Cycle

44 Pages Posted: 23 Jun 2000

See all articles by Robert A. Hart

Robert A. Hart

University of Stirling - Department of Economics; Institute for the Study of Labor (IZA)

Yue Ma

City University of Hong Kong (CityU) - Department of Economics & Finance

Date Written: March 2000

Abstract

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

Hart, Robert A. and Ma, Yue, Wages, Hours and Human Capital Over the Life Cycle (March 2000). Available at SSRN: https://ssrn.com/abstract=233892 or http://dx.doi.org/10.2139/ssrn.233892

Robert A. Hart (Contact Author)

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom
+44 1786 467 471 (Phone)
+44 1786 467 469 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Yue Ma

City University of Hong Kong (CityU) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

HOME PAGE: http://www.cb.cityu.edu.hk/staff/yuema24

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