The Spot Market Matters: Evidence on Implicit Contracts from Britain

Paul Devereux and Robert Hart

No 1497, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Based on the methodology of Beaudry and DiNardo (1991), this paper investigates the relative importance of the spot market and implicit contracts in the determination of British real wages. Empirical work is carried out separately for males and females with individual-level data taken from the New Earnings Survey Panel for the years 1976 to 2001. In contrast to previous studies that used North American data, the spot market is found to be more important than implicit contracts in determining real wages. Indeed, there is very little support for implicit contracts in these data. Further evidence is provided through the analysis of individual wage sequences. These suggest that the downwardly rigid wage sequences implied by implicit contracts with costless worker mobility are not prevalent in Britain.

Keywords: spot market wages; wage sequences; unemployment; implicit contracts (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-02
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published - published in: Scottish Journal of Political Economy, 2007, 54 (5), 661-683 (Special Issue on Labour Contracts and Wages over the Cycle)

Downloads: (external link)
https://docs.iza.org/dp1497.pdf (application/pdf)

Related works:
Journal Article: THE SPOT MARKET MATTERS: EVIDENCE ON IMPLICIT CONTRACTS FROM BRITAIN (2007)
Working Paper: The spot market matters: evidence on implicit contracts from Britain (2005)
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:iza:izadps:dp1497

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().