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ABOWD, JOHN M. CARD, DAVID E. Intertemporal Labor Supply and Long-Term Employment Contracts American Economic Review 77,1 (March 1987): 50-68. Also: NBER Working Paper No. 1831, February 1986. Cohort(s): Older Men ID Number: 7 Publisher: American Economic Association Permission to reprint the abstract has not been received from the publisher. We compare a contracting model and a labor supply model. One test is whether earnings changes are more variable than hours changes, as predicted by the labor supply model, or less variable, as predicted by the contracting model. We apply this test to two longitudinal surveys and find that earnings are somewhat more variable than hours for men who never change employers. The estimates suggest that changes in earnings and hours not associated with measurement error occur at fixed wage rates. ABOWD, JOHN M. CARD, DAVID E. On the Covariance Structure of Earnings and Hours Changes Econometrica 57,2 (March 1989): 411-445 Cohort(s): Older Men ID Number: 8 Publisher: Department of Economics, Northwestern University Permission to reprint the abstract has not been received from the publisher. This paper presents an empirical analysis of individual earnings and hours data from three different longitudinal surveys. In the first part of the paper we catalog the main features of the covariance structure of earnings and hours changes. We find that this structure is very similar across data sets, and may be adequately summarized by a simple components-of-variance model, consisting of (i) serially uncorrelated measurement error, (ii) a shared component of earnings and hours with a second-order moving average covariance structure, and (iii) a nonstationary component that affects only the variances and contemporaneous covariances of earnings and hours. In the second part of the paper we offer an interpretation of this model in terms of a simple life-cycle labor supply model. On the assumption that we can identify individual productivity growth with the shared component of earnings and hours variation, we obtain estimates of the intertemporal substitution elasticity. The results are not favorable to the life-cycle model: most of the covariation of earnings and hours occurs at fixed hourly wage rates. Search returned 2 items. Search Start: 20:33:16 Search Finish: 20:33:16
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