Cost-of-Living Adjustment Clauses in Union Contracts / Ronald G. Ehrenberg, Leif Danziger, Gee San.

Format:

Book

Author/Creator:

Ehrenberg, Ronald G.

Contributor:

National Bureau of Economic Research.

Danziger, Leif.

San, Gee.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0998.

NBER working paper series no. w0998

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1982.

Summary:

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.

Notes:

Print version record

October 1982.