An Empirical Model of Wage Indexation Provisions in Union Contracts

60 Pages Posted: 15 Mar 2004

See all articles by David Card

David Card

University of California, Berkeley - Department of Economics; Institute for the Study of Labor (IZA); National Bureau of Economic Research (NBER)

Date Written: June 1984

Abstract

Cost of living escalators are an important feature of North American labor contracts. This paper presents a measure of the response of index-linked wage increases to concurrent price increases for a sample of Canadian contracts, and then analyses this response in terms of a simple model of indexation to the aggregate price level. The model highlights the importance of aggregate price movements in conveying information about industry-specific prices. The empirical analysis confirms that industry-specific correlations between input and output prices and the Consumer Price Index are important determinants of the response of wage to prices across index contracts.

Suggested Citation

Card, David E., An Empirical Model of Wage Indexation Provisions in Union Contracts (June 1984). NBER Working Paper No. w1388. Available at SSRN: https://ssrn.com/abstract=324026

David E. Card (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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Institute for the Study of Labor (IZA)

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Germany

National Bureau of Economic Research (NBER)

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