Wage Dynamics and Cohort Effects
|Speaker:||Jonathan Thomas , University of Edinburgh|
|Date:||Friday 19 November 2004|
|Location:||Lecture Room D, Streatham Court|
(with Pedro Martins and Andy Snell)
Abstract This paper re-examines a problem first studied by Beaudry and DiNardo (1991), who derived testable implications of three models of wage formation and found support for an implicit contract model in which workers are perfectly mobile. We analyse a model in which firms cannot pay discriminate based on year of entry to the firm, and argue that the wage dynamics are similar to the Beaudry and DiNardo model. Since in the latter model worker (under a hiring condition) mobility/commitment does not ffect the optimal contract, it is argued that existing empirical research does not discriminate between dfferent models of worker commitment.