Working Paper: NBER ID: w1931
Authors: David Card
Abstract: This paper presents an empirical analysis of firm-specific \nemployment and wage outcomes for mechanics in the domestic airline \nindustry. A dynamic contracting model is presented that incorporates \nboth costly employment adjustment and potential gaps between contract \nwage rates and the opportunity value of workers' time. The model gives \na useful description of the employment-output linkage in the data, but \nis less successful in capturing the dynamic relation between employment, \ncontract wage rates, and wage rates outside the airline industry.
Keywords: employment; wage rates; airline mechanics; dynamic contracting; efficient contracts
JEL Codes: J30; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| alternative wage rates (J31) | employment (J68) |
| current and lagged alternative wages (J39) | employment (J68) |
| lagged manufacturing wage rates (J39) | current employment levels (J63) |
| contract wages (J33) | employment (J68) |
| manufacturing wages (J39) | employment (J68) |
| marginal value product of labor = outside opportunity wage (J39) | employment (J68) |