The Spot Market Matters: Evidence on Implicit Contracts from Britain
34 Pages Posted: 26 Feb 2005
Date Written: February 2005
Abstract
Based on the methodology of Beaudry and DiNardo (1991), this paper investigates the relative importance of the spot market and implicit contracts in the determination of British real wages. Empirical work is carried out separately for males and females with individual-level data taken from the New Earnings Survey Panel for the years 1976 to 2001. In contrast to previous studies that used North American data, the spot market is found to be more important than implicit contracts in determining real wages. Indeed, there is very little support for implicit contracts in these data. Further evidence is provided through the analysis of individual wage sequences. These suggest that the downwardly rigid wage sequences implied by implicit contracts with costless worker mobility are not prevalent in Britain.
Keywords: spot market wages, implicit contracts, unemployment, wage sequences
JEL Classification: E24, E32, J31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Measuring the Cyclicality of Real Wages: How Important is Composition Bias
By Gary Solon, Robert Barsky, ...
-
Real Wages Over the Business Cycle
By Robert Barsky and Gary Solon
-
Real Wage Cyclicality of Job Stayers, Within-Company Job Movers, and Between-Company Job Movers
By Paul J. Devereux and Robert A. Hart
-
New Evidence on Real Wage Cyclicality within Employer-Employee Matches
By Donggyun Shin and Gary Solon
-
Why are the Wages of Job Stayers Procyclical?
By Donggyun Shin and Kwanho Shin
-
Movements of Wages Over the Business Cycle: An Intra-Firm View