The spot market matters: evidence on implicit contracts from Britain

Paul Devereux and Robert Hart

Open Access publications from School of Economics, University College Dublin

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; Implicit contracts; Unemployment; Wage sequences; Labor contract--Mathematical models; Personnel management--Mathematical models; Unemployment--Effect of wages on; Wages--Mathematical models (search for similar items in EconPapers)
JEL-codes: E24 E32 J31 (search for similar items in EconPapers)
Date: 2005-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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http://hdl.handle.net/10197/741 First version, 2005 (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)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:oapubs:10197/741

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