Report
Early contract renegotiation: An analysis of U.S. labor contracts from 1970 to 1995
Rich, Robert W.; Tracy, Joseph (2011)
This paper examines the ex post flexibility of U.S. labor contracts during the 1970-95 period by investigating whether unanticipated changes in inflation increase the likelihood of a contract being renegotiated prior to its expiration. We find strong empirical support for this hypothesis. Specifically, our results indicate that renegotiations are triggered principally by large and infrequent price shocks of either sign. When combined with evidence that ex ante contract durations are shorter during episodes of increased inflation uncertainty, our results suggest that these contracts are ...
Staff Reports , Paper 521

Report
Uncertainty and labor contract durations
Rich, Robert W.; Tracy, Joseph (2000)
This paper provides an empirical investigation into the relationship between ex ante U.S. labor contract durations and uncertainty over the period 1970 to 1995. We construct measures of inflation uncertainty as well as aggregate nominal and real uncertainty. The results not only corroborate previous findings of an inverse relationship between contract durations and inflation uncertainty, but also document that this relationship extends to both measures of aggregate uncertainty. We also explore the robustness of this relationship to various measures of inflation uncertainty that have appeared ...
Staff Reports , Paper 106

Journal Article
State of the union
Clement, Douglas (2001-05)
Fedgazette , Volume 13 , Issue May , Pages 1

Working Paper
What are the short-run effects of increasing labor market flexibility?
Veracierto, Marcelo (2000)
This paper evaluates the short-run effects of introducing labor market flexibility to an economy characterized by large firing taxes. Different reforms are considered: 1) eliminating all firing taxes, 2) introducing flexible new contracts while retaining the firing taxes on workers employed previous to the reform, and 3) introducing temporary contracts. The paper finds that eliminating all firing taxes increases the unemployment rate much more in the short run than in the long run, that introducing new flexible contracts has similar effects as eliminating all firing taxes, and that ...
Working Paper Series , Paper WP-00-29

Working Paper
When should labor contracts be nominal?
Martin, Antoine; Monnet, Cyril (2001)
We propose a theory to explain the choice between nominal and indexed labor contracts. We find that contracts should be indexed if prices are difficult to forecast and nominal otherwise. Our analysis is based on a principal-agent model developed by Jovanovic and Ueda (1997) in which renegotiation can take place once the nominal value of the agent's output is observed. Their model assumes that agents use pure strategy, with the strong result that only nominal contracts can be written without being renegotiated. But, in reality, we do observe indexed contracts. We resolve this weakness of their ...
Research Working Paper , Paper RWP 01-07

Journal Article
This time may not be that different: labor markets, the Great Recession and the (not so great) recovery
Tasci, Murat (2011-09)
The last three U.S. recessions have been followed by ?jobless recoveries.? The lack of robust job growth once GDP starts to pick up has a lot people asking if labor markets have changed in some fundamental way. I look at employment and unemployment growth in every recession since the 1950s and find that the current levels of these indicators can be explained by the severity of the Great Recession and the slow growth of GDP in the recovery.
Economic Commentary , Issue Sept

Working Paper
Fixed term employment contracts in an equilibrium search model
Alvarez, Fernando; Veracierto, Marcelo (2005)
Fixed term employment contracts have been introduced in number of European countries as a way to provide flexibility to economies with high employment protection levels. We introduce these contracts into the equilibrium search model in Alvarez and Veracierto (1999), a version of the Lucas and Prescott island model, adapted to have undirected search and variable labor force participation. We model a contract of length J as a tax on separations of workers with tenure higher than J. We show a version of the welfare theorems, and characterize the efficient allocations. This requires solving a ...
Working Paper Series , Paper WP-05-14

Journal Article
Union COLA's on the decline
Weiner, Stuart E. (1986-06)
Economic Review , Volume 71 , Issue Jun , Pages 10-25

Journal Article
Labor pains
Clement, Douglas (2001-05)
Fedgazette , Volume 13 , Issue May , Pages 2-5, 7-8

Report
A note on labor contracts with private information and household production
Rogerson, Richard; Wright, Randall; Nosal, Ed (1991)
A classic result in the theory of implicit contract models with asymmetric information is that ?underemployment? results if and only if leisure is an inferior good. We introduce household production into the standard implicit contract model and show that we can have underemployment at the same time that leisure is a normal good.
Staff Report , Paper 131