Financial markets and wages
By: Claudio Michelacci, Vincenzo Quadrini.
Contributors: Quadrini, Vincenzo.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 11050.; Working paper series (National Bureau of Economic Research) -- working paper no. 11050.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 45
Subjects: Wages -- Econometric models
Description: "We study a labor market equilibrium model in which firms sign optimal long-term contracts with workers. Firms that are financially constrained offer an increasing wage profile: They pay lower wages today in exchange of higher wages once they become unconstrained and operate at a larger scale. In equilibrium, constrained firms are on average smaller and pay lower wages. In this way the model generates a positive relation between firm size and wages. Using data from the National Longitudinal Survey of Youth (NLSY) we show that the key dynamic properties of the model are supported by the data"--National Bureau of Economic Research web site.
Notes: "January 2005."

Includes bibliographical references (p. 43-45).

Also available in PDF from the NBER world wide web site (www.nber.org).