EconPapers    
Economics at your fingertips  
 

Financial Markets and Wages

Claudio Michelacci () and Vincenzo Quadrini ()

Review of Economic Studies, 2009, vol. 76, issue 2, 795-827

Abstract: We study a labour market equilibrium model in which firms sign optimal long-term contracts with workers. Firms that are financially constrained offer an increasing wage profile: they pay lower wages today in exchange for higher future wages once they become unconstrained. Because constrained firms grow faster, the model predicts a positive correlation between the growth of wages and the growth of the firm. Under some conditions, the model also generates a positive relation between firm size and wages. Using matched employer-employee data from Finland and the National Longitudinal Survey of Youth for the U.S., we show that the key dynamic properties of the model are supported by the data. Copyright , Wiley-Blackwell.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (26) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1467-937X.2008.00524.x (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Financial Markets and Wages (2005) Downloads
Working Paper: Financial Markets and Wages (2005) Downloads
Working Paper: Financial Markets and Wages (2004)
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:oup:restud:v:76:y:2009:i:2:p:795-827

Access Statistics for this article

Review of Economic Studies is currently edited by Andrea Prat, Bruno Biais, Kjetil Storesletten and Enrique Sentana

More articles in Review of Economic Studies from Oxford University Press
Bibliographic data for series maintained by Oxford University Press () and Christopher F. Baum ().

 
Page updated 2022-01-13
Handle: RePEc:oup:restud:v:76:y:2009:i:2:p:795-827