This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Intertemporal Labor Supply and Long Term Employment Contracts

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
John M. Abowd
David Card

Additional information is available for the following registered author(s):

Abstract

In this paper we compare the implications of a symmetric information contracting model and a dynamic labor supply model for changes in individual earnings and hours over time. The critical distinction between these models is whether earnings represent optimal consumption or payment for current labor services. We develop a simple test between labor supply and contracting models based on the relative variability of earnings and hours with respect to changes in productivity. If earnings represent consumption then changes in productivity generate smaller changes in earnings than hours. The opposite is true in the labor supply model. We apply our test to longitudinal data on male household heads fran the Panel Study of Income Dynamics and the National Longitudinal Survey of Older Men, focusing on individuals who do not change employers during the survey period. Neither model fits the data well. In both surveys, however, the contrihition of changes in productivity to changes in earnings is greater than the contribution to changes in hours. The data are more consistent with a labor supply interpretation, although the estimated labor supply elasticities suggest that changes in hours occur at fixed wage rates.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nber.org/papers/w1831.pdf
File Format: application/pdf
File Function:
Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1831.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Feb 1986
Date of revision:
Handle: RePEc:nbr:nberwo:1831

Note: LS
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Other versions of this item:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
  1. Jonathan P Thomas & Tim Worrall, 2007. "Limited Commitment Models of the Labour Market," Keele Economics Research Papers KERP 2007/11, Centre for Economic Research, Keele University. [Downloadable!]
    Other versions:
  2. Joseph G. Altonji & Lewis M. Segal, 1994. "Small Sample Bias in GMM Estimation of Covariance Structures," NBER Technical Working Papers 0156, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. João Ricardo Faria & Miguel León-Ledesma, 2000. "The Intertemporal Substitution Model of Labor Supply in an Open Economy," Studies in Economics 0009, Department of Economics, University of Kent. [Downloadable!]
  4. repec:fth:prinin:224 is not listed on IDEAS
  5. Joel L. Horowitz, 1996. "Bootstrap Methods For Covariance Structures," Econometrics 9610003, EconWPA. [Downloadable!]
  6. repec:fth:prinin:234 is not listed on IDEAS
  7. Christian Calmès, 2003. "Poignée de main invisible et persistance des cycles économiques : une revue de la littérature," Working Papers 03-40, Bank of Canada. [Downloadable!]
  8. repec:fth:prinin:343 is not listed on IDEAS
  9. Christian Sigouin, 2000. "Self-enforcing Employment Contracts and Business Cycle Fluctuations," Cahiers de recherche CREFE / CREFE Working Papers 127, CREFE, Université du Québec à Montréal. [Downloadable!]
  10. Grzegorz Kula, 2003. "Retirement with Perfect Insurance," Tinbergen Institute Discussion Papers 03-097/3, Tinbergen Institute. [Downloadable!]
  11. Rebecca M. Blank, 1987. "Why are Wages Cyclical in the 1970's?," NBER Working Papers 2396, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Josep Pijoan-Mas 2 & Antonia Díaz & José-Víctor Ríos-Rull, 2001. "Habit Formation: Inplications For The Wealth Distribution," Economics Working Papers we015114, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  13. S. Rao Aiyagari & Mark Gertler, 1990. "Asset Returns with Transactions Cost and Uninsured Risk: A Stage III Exercise," NBER Working Papers 3481, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. repec:fth:prinin:252 is not listed on IDEAS
  15. Mercedes Garcia-Escribano, 2004. "Does Spousal Labor Smooth Fluctuations in Husbands' Earnings? The Role of Liquidity Constraints," IMF Working Papers 04/20, International Monetary Fund. [Downloadable!]
  16. Mehmet Caner, 2005. "Nearly Singular design in gmm and generalized empirical likelihood estimators," Working Papers 211, University of Pittsburgh, Department of Economics, revised Jan 2005. [Downloadable!]
    Other versions:
  17. Paul Beaudry & John DiNardo, 1989. "Long-Term Contracts and Equilibrium Models of the Labor Market: Some Favorable Evidence," Working Papers 632, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  18. Kartik Athreya, 2004. "Fresh start or head start? Uniform bankruptcy exemptions and welfare," Working Paper 03-03, Federal Reserve Bank of Richmond. [Downloadable!]
    Other versions:
  19. Robert B. Barsky & Gary Solon, 1989. "Real Wages Over The Business Cycle," NBER Working Papers 2888, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. H. Osano & T. Inoue, 1988. "Testing Between Competing Models of Business Cycles: The Efficient Long-Term Contract Hypothesis Versus the Intertemporal Substitution Hypothesis," Discussion Papers 768, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  21. José Victor Rios-Rull, 2002. "Desigualdad, ¿qué sabemos?," Investigaciones Economicas, Fundación SEPI, vol. 26(2), pages 221-254, May. [Downloadable!]
  22. S. Rae Aiyagari & Dan Peled, 1995. "Social insurance and taxation under sequential majority voting and utilitarian regimes," Staff Report 197, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  23. John C. Ham & Kevin T. Reilly, 2006. "Using Micro Data to Estimate the Intertemporal Substitution Elasticity for Labor Supply in an Implicit Contract Model," IEPR Working Papers 06.54, Institute of Economic Policy Research (IEPR). [Downloadable!]
  24. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
  25. Julio Davila & Jay H. Hong & Per Krusell & José-Victor Rios Rull, 2005. "Constrained efficiency in the neoclassical growth model with uninsurable idiosyncratic shocks," Cahiers de la Maison des Sciences Economiques b05066, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
    Other versions:
Statistics
Access and download statistics

Did you know? Want to help out with this project? Look for volunteer opportunities.

This page was last updated on 2009-11-13.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.