NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

An Empirical Model of Wage Indexation Provisions in Union Contracts

David Card

NBER Working Paper No. 1388
Issued in June 1984
NBER Program(s):   LS

Cost of living escalators are an important feature of North American labor contracts. This paper presents a measure of the response of index-linked wage increases to concurrent price increases for a sample of Canadian contracts, and then analyses this response in terms of a simple model of indexation to the aggregate price level. The model highlights the importance of aggregate price movements in conveying information about industry-specific prices. The empirical analysis confirms that industry-specific correlations between input and output prices and the Consumer Price Index are important determinants of the response of wage to prices across index contracts.

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Document Object Identifier (DOI): 10.3386/w1388

Published: Card, David. "An Empirical Model of Wage Indexation Provisions in Union Contracts." Journal of Political Economy, Vol. 94, No. 3, Part 2, pp. S144-S 175, June 1986. citation courtesy of

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