Skip to main content

Uncertainty and front-end loading of labor agreements

Abstract

Uncertainty of future prices is offered as an explanation for front-end loading of real wages in nominal wage contracts. Exploitation of mutually beneficial gains from trade between risk-neutral employers and employees implies an expected future real wage that is lower the greater is the uncertainty of future prices, and the observed extent of front-end loading is consistent with plausible values of uncertainty of future prices.

This is a preview of subscription content, access via your institution.

References

  1. U.S. Bureau of Labor Statistics.Current Wage Developments. Washington, D.C., September 1977, April 1982.

  2. Hall, R. E. and D. M. Lilien. “Efficient Wage Bargains under Uncertain Supply and Demand.”American Economic Review (December 1979), pp. 868–879.

  3. Maddala, G. S.Econometrics. New York: McGraw-Hill, 1977.

    Google Scholar 

Download references

Author information

Affiliations

Authors

Additional information

I would like to thank, without implicating, M. L. Burstein, George Fallis, and an anonymous referee for helpful comments.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Beare, J.B. Uncertainty and front-end loading of labor agreements. Journal of Labor Research 6, 113–117 (1985). https://doi.org/10.1007/BF02685156

Download citation

Keywords

  • Wage Rate
  • Real Wage
  • Nominal Wage
  • Efficient Wage
  • Future Prex