Uncertainty and Labor Contract Durations - FEDERAL RESERVE BANK of NEW YORK

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Staff Reports

Uncertainty and Labor Contract Durations

June 2000 Number 106

JEL classification: J41, J51, E24

Authors: Robert Rich and Joe Tracy

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 in the literature.

Available only in PDF PDF

49 pages / 263 kb

For a published version, see Robert Rich and Joseph Tracy, "Uncertainity and Labor Contract Durations," Review of Economics and Statistics 86, no. 1 (February 2004): 270-87.

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