Implicit Contracts and the Cyclicality of the Skill-Premium

Panayiotis Pourpourides

No E2007/19, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: To examine the cyclical behavior of the skill-premium, this paper introduces implicit labor contracts in a DSGE model where production is characterized by capital-skill complementarity and the utilization of capital is endogenous. It is shown that this model can reproduce the observed cyclical patterns of wages and the skill-premium. The feature of capital-skill complementarity coupled with variable capital utilization rates does not come at odds with the acyclical behavior of the skill-premium. The paper argues that the skill-complementarity of capital is not a quantitatively significant factor at high frequencies. The key aspects are the contracts and the capital utilization margin.

Keywords: Implicit Contracts; Wages; Skill-Premium; Business Cycles; Capital-Skill Complementarity (search for similar items in EconPapers)
JEL-codes: E13 E24 E32 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2007-06, Revised 2010-04
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Journal of Economic Dynamics and Control , Volume 35, 2011, 963-979

Downloads: (external link)
http://carbsecon.com/wp/E2007_19.pdf (application/pdf)

Related works:
Journal Article: Implicit contracts and the cyclicality of the skill-premium (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2007/19

Access Statistics for this paper

More papers in Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section Contact information at EDIRC.
Bibliographic data for series maintained by Yongdeng Xu ().