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Please use this identifier to cite or link to this item: http://arks.princeton.edu/ark:/88435/dsp01cv43nw81x
 Title: Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts Authors: Card, David Keywords: employment determinationreal wagesefficient contracts Issue Date: 1-May-1988 Citation: American Economic Review, 80, September 1990 Series/Report no.: Working Papers (Princeton University. Industrial Relations Section) ; 232 Abstract: This paper presents new evidence on the relevance of nominal contracting models for employment determination in long term union contracts. A key aspect of these contracts, much emphasized in the macroeconomics literature, is the predetermined nature of nominal wages. Real wage rates therefore contain unanticipated components that reflect unexpected changes in prices and the degree of indexation in the contract. The empirical analysis, based on a sample of 1300 indexed and non-indexed contracts from the Canadian manufacturing sector, indicates that unexpected real wage changes are associated with systematic employment responses in the opposite direction. I conclude that nominal contracting provisions play a potentially important role in the cyclical properties and persistence of employment in the union sector. URI: http://arks.princeton.edu/ark:/88435/dsp01cv43nw81x Related resource: http://links.jstor.org/sici?sici=0002-8282%28199009%2980%3A4%3C669%3AUIRWAE%3E2.0.CO%3B2-V Appears in Collections: IRS Working Papers

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