Menu Costs, Nominal Wage Revisions, and Intracontract Wage Behavior

17 Pages Posted: 6 May 2003

See all articles by Louis N. Christofides

Louis N. Christofides

University of Cyprus - Department of Economics; University of Guelph; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Audrey Laporte

University of Toronto

Abstract

We use data from indexed and nonindexed Canadian wage agreements to study the intracontract profile of nominal and real wages. Allowing for endogenous switching between the two indexation categories, we conclude that the number of nominal wage revisions depends on contract duration, expected inflation, and the cost of adjusting wages. Our results have implications for the menu cost, overlapping contracts, dynamic monopoly union, and efficient bargain literatures.

Suggested Citation

Christofides, Louis N. and Laporte, Audrey, Menu Costs, Nominal Wage Revisions, and Intracontract Wage Behavior. Industrial Relations, Vol. 41, pp. 287-303, 2002. Available at SSRN: https://ssrn.com/abstract=312704

Louis N. Christofides (Contact Author)

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
357 22 892448 (Phone)
357 22 892432 (Fax)

University of Guelph ( email )

Guelph, Ontario
Canada
001-519-763-8497 (Phone)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

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

Audrey Laporte

University of Toronto ( email )

Institute of Health Policy, Management and Evaluat
155 College Street, 4th floor
Toronto, Ontario M5S 3M6
Canada

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