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Title: Financial Markets and Wages
Resulting in 1 citation.
1. Michelacci, Claudio
Quadrini, Vincenzo
Financial Markets and Wages
NBER Working Paper No. 11050, National Bureau of Economic Research, January 2005.
Also: http://www.nber.org/papers/w11050.pdf
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Family Size; Modeling; Skilled Workers; Wage Equations; Wage Levels

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.
Bibliography Citation
Michelacci, Claudio and Vincenzo Quadrini. "Financial Markets and Wages." NBER Working Paper No. 11050, National Bureau of Economic Research, January 2005.