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Uniform and Nonuniform Staggering of Wage Contracts

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  • Leif Danziger

Abstract

This paper provides a model that can account for the almost uniform staggering of wage contracts in some countries as well as for the markedly nonuniform staggering in others. In the model, short and long contracts as well as long contracts concluded in different periods are strategic substitutes, which provides a powerful rationale for staggering. We show that for realistic parameter values, there is a continuum of possible equilibria with various degrees of staggering of long contracts. If the contracting cost is not too large, then the lowest possible degree of staggering decreases with the contracting cost and increases with monetary uncertainty.

Suggested Citation

  • Leif Danziger, 2010. "Uniform and Nonuniform Staggering of Wage Contracts," CESifo Working Paper Series 3112, CESifo.
    • Handle: RePEc:ces:ceswps:_3112
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    References listed on IDEAS

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    Cited by:

    1. Chen, Yu-Fu & Funke, Michael, 2010. "Global Warming And Extreme Events: Rethinking The Timing And Intensity Of Environmental Policy," SIRE Discussion Papers 2010-48, Scottish Institute for Research in Economics (SIRE).

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    More about this item

    Keywords

    uniform staggering; nonuniform staggering; monetary policy shocks; strategic substitutability; wage contracts; contract duration;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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