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| Author: | Kilponen, J. Santavirta, T. |
| Title: | New evidence on implicit contracts from linked employer-employee data |
| Journal: | Scandinavian Journal of Economics
2010 : VOL. 112:4 p. 864-883 |
| Index terms: | skills pay business cycles models employment labour markets education |
| Language: | eng |
| Abstract: | This paper improves the precision of the implicit contract model test proposed by Beaudry and DiNardo (1991). The used dataset allows to define the exact industry and plant of a particular employment relationship, link local labor market characteristics to individual level salaries, and control for composition effects. The paper finds 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. Particularly, 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. |
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