Cost-of-Living Adjustment Clauses in Union Contracts

Ronald Ehrenberg, Leif Danziger () and Gee San

No 998, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Our paper seeks to provide an explanation for why the prevalence of COLA provisions and their characteristics vary widely across U.S. industries. We develop models of optimal risk sharing between a firm and union that allows us to investigate the determinants of a number of characteristics of union contracts. These include the presence of wage indexation, the degree of wage indexation if it exists, the magnitude of deferred noncontingent (on the price level) wage increases, the duration of labor contracts and the trade-off between temporary layoffs and wage indexation. Preliminary empirical tests of some of the implications of the model are conducted using industry data on both the prevalence of COLA provisions and layoff rates, and using contract level data on the characteristics of COLA provisions and contract duration. One key finding is that the level of unemployment insurance benefits appears to simultaneously influence the level of layoffs and the extent of COLA coverage.

Date: 1982-10
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published as Ehrenberg, Ronald G., Leif Danziger and Gee San. "Cost-of-Living Adjustment Clauses in Union Contracts: A Summary of Results." Journal of Labor Economics, Vol. 1, No. 3, (July 1983), pp. 215-245.

Downloads: (external link)
http://www.nber.org/papers/w0998.pdf (application/pdf)

Related works:
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:nbr:nberwo:0998

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w0998

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().