TY  - JOUR
AU  - Card,David
TI  - An Empirical Model of Wage Indexation Provisions in Union Contracts
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1388
PY  - 1984
Y2  - June 1984
UR  - http://www.nber.org/papers/w1388
L1  - http://www.nber.org/papers/w1388.pdf
N1  - Author contact info:
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA  94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu
AB  - 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.
ER  -