Extension of labor contracts and optimal backpay
By: by Leif Danziger
Series: Discussion paper -- no. 2366; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 2366
Publisher: IZA
Published: 2006
Place of publication: Bonn, Germany
Language: eng
Format: [electronic resource] /
Subjects: Labor contract; Collective labor agreements
Description: "This paper explains why a union and a firm might settle on a contract duration that may later be extended and characterizes the optimal backpay for the holdout period. It is shown that the choice between concluding a shorter contract that may be extended and immediately concluding a longer contract depends on the prevalence of the different types of uncertainty in the economy. It is also shown that the optimal backpay reduces the negative impact of nominal uncertainty on a worker's real income, but increases the worker's exposure to idiosyncratic uncertainty"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 12/18/2006.

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