Wages, hours, and human capital over the life cycle
We investigate wage-hours contracts within a four-period rent sharing model that incorporates asymmetric information. Distinctions are made among (a) an investment period, (b) a period in which the parties may separate (quits or layoffs) or continue rent accumulation and sharing, (c) a post investment period and, (d) retirement. We establish that increases in both wage rates and hours of work in the post-investment period serve to minimise sub-optimal separations and, moreover that both wage and hours schedules are concave. The model is tested with the British Household Panel Survey (1991-1997) and with the British Labour Force Survey (1993/4).
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asymmetric information BHPS BHPS/LFS ind C. M. Schmidt ceteris paribus changed jobs coefficient cycle D. J. Snower disutility Education Empirical Appendix end of period equation Ethnic German evaluate expected tenure SET first-order conditions fixed effects four-period hourly wage rate hours also rise hours and wage hours growth hours profiles Hours rise human capital investments i-th period Immigrant intensive margin investment period IZA Discussion Papers job satisfaction K. F. Zimmermann labor economics labor markets Labour Force Survey LET group long expected tenure Migration optimal overtime premium period i-1 post-investment period probability probit quits and layoffs R. A. Hart R. T. Riphahn random variable relative rent sharing returns second period rent Selection Bias SET and LET short expected tenure simulations straight-time wage Table tenure LET Theory Appendix Unemployment University of Stirling variable wage and hours wage earnings wage-hour contract weekly hours worker is fired worker quits worker stays