Wage Profiles: Shape and Variations

Kazuhiro Arai

The Manchester School of Economic & Social Studies, 1997, vol. 65, issue 3, pages 244-58

Abstract: This paper shows that wage profiles become similar to expenditure profiles and exhibit similar variations if the firm plays the roles of financial institutions and/or government when the latter institutions do not function perfectly for workers. Wage profiles slope upwards because of intergenerational transfers among the firm's workers reflecting their preferences over life-cycle consumption. Variations arise when there are generational differences in consumption because of the firm's absorption of risk concerning the price of consumption goods or because of intergenerational risk-sharing. The shape of the wage profile is affected by how well other institutions function. Copyright 1997 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1997

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Persistent link: http://EconPapers.repec.org/RePEc:bla:manch2:v:65:y:1997:i:3:p:244-58

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