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Title: Financial Markets and Wages
Resulting in 1 citation.
1. Michelacci, Claudio
Quadrini, Vincenzo
Financial Markets and Wages
Review of Economic Studies 76,2 (April 2009): 795-827.
Cohort(s): NLSY79
Publisher: Blackwell Publishing, Inc. => Wiley Online
Keyword(s): Cross-national Analysis; Finland, Finnish; Firm Size; Firms; Rural/Urban Differences; Wage Growth; Wage Models

We study a labour 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 for higher future wages once they become unconstrained. Because constrained firms grow faster, the model predicts a positive correlation between the growth of wages and the growth of the firm. Under some conditions, the model also generates a positive relation between firm size and wages. Using matched employer-employee data from Finland and the National Longitudinal Survey of Youth for the U.S., we show that the key dynamic properties of the model are supported by the data. Reprinted by permission of the publisher.
Bibliography Citation
Michelacci, Claudio and Vincenzo Quadrini. "Financial Markets and Wages." Review of Economic Studies 76,2 (April 2009): 795-827.