Abstract
Previous studies have examined various aspects of indexation. We can distinguish two major points of interest: wage determination, and the effects of indexation on macroeconomic fluctuations. Some scholars have attempted to determine empirically and theoretically the causes of cost-of-living adjustment (COLA) clauses in wage contracts [3;7; 11]. The focus in this research is often on major union contracts, with wage change a function of both real factors (e.g., the unemployment rate) and monetary factors (e.g., past inflation). Typical results are that past inflation will increase the adoption of indexation, while industry-specific shocks may cause resistance to indexation. In addition, Kaufman and Woglom [7] have shown that current labor market conditions have a significant impact on long-term contracts. Research has also been concerned with the effect of wage indexation on the macroeconomy [1;2;5;6]. How can wage indexation schemes be designed so as to alleviate the substantial income redistribution due to inflation and the use of contracts in nominal
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
