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New Evidence on Implicit Contracts from Linked Employer–Employee Data
Bank of Finland.
Aalto University School of Economics.
2010 (English)In: The Scandinavian Journal of Economics, Vol. 112, no 4, 864-883 p.Article in journal (Refereed) Published
Abstract [en]

We improve the precision of the implicit contract model test proposed by Beaudry and DiNardo (1991). Our dataset allows us to define the exact industry and plant of a particular employment relationship, link local labor market characteristics to individual-level wages, and control for composition effects. We find evidence in favor of the spot-market model of wage setting in the whole sample, but there is significant variation across industries and education levels. In particular, the spot market matters most for low-skill workers, while the implicit contract model with one-sided limited commitment applies better to high-skill workers.

Place, publisher, year, edition, pages
2010. Vol. 112, no 4, 864-883 p.
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URN: urn:nbn:se:uu:diva-274890DOI: 10.1111/j.1467-9442.2010.01623.xOAI: oai:DiVA.org:uu-274890DiVA: diva2:897828
Available from: 2016-01-26 Created: 2016-01-26 Last updated: 2016-01-26

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Santavirta, Torsten

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