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dc.contributor.authorEarle, John S.en_US
dc.contributor.authorSabirianova, Klara Z.en_US
dc.coverage.temporal1995-1998en_US
dc.date.accessioned2009-01-28T16:18:52Z-
dc.date.available2009-01-28T16:18:52Z-
dc.date.issued2000en_US
dc.identifier.urihttp://hdl.handle.net/10419/21040-
dc.description.abstractWe present a model of wage contract violation that implies a possibility of multiple equilibria in the level of arrears. Positive feedback arises because each employer's arrears affect the costs of late payment faced by other employers operating in the same labor market, resulting in a network externality or strategic complementarity in the adoption of the practice. We study the case of three equilibria, distinguishing two that are stable: the "punctual payment equilibrium" and the "late payment equilibrium." Our econometric analysis of linked employer-employee data for Russia supports the model's contention that the firm's costs of wage arrears – as embodied in worker effort, quit and strike behavior, and the probability of legal penalties – are attenuated by arrears in the local labor market. We estimate the arrears reaction function implied by the model, showing that it exhibits strongly positive feedback, and that the theoretical conditions for multiple equilibria under symmetric local labor market competition are satisfied in 1995 and 1998. Simulation results imply a late payment equilibrium characterized by six monthly overdue wages for a typical worker in 1995 and nine in 1998.en_US
dc.language.isoengen_US
dc.publisheren_US
dc.relation.ispartofseriesIZA Discussion paper series 196en_US
dc.subject.jelP23en_US
dc.subject.jelL14en_US
dc.subject.jelJ30en_US
dc.subject.jelO17en_US
dc.subject.jelJ33en_US
dc.subject.jelP31en_US
dc.subject.jelK42en_US
dc.subject.ddc330en_US
dc.subject.keywordWage arrearsen_US
dc.subject.keywordcontractual failureen_US
dc.subject.keywordinstitutionsen_US
dc.subject.keywordinstitutional lock-inen_US
dc.subject.keywordsocial interactionsen_US
dc.subject.keywordRussiaen_US
dc.subject.keywordtransitionen_US
dc.subject.stwLohnen_US
dc.subject.stwVerbindlichkeitenen_US
dc.subject.stwHysteresisen_US
dc.subject.stwLohntheorieen_US
dc.subject.stwArbeitsmarkttheorieen_US
dc.subject.stwSoziale Beziehungenen_US
dc.subject.stwBetrieblicher Konflikten_US
dc.subject.stwÜbergangswirtschaften_US
dc.subject.stwSchätzungen_US
dc.subject.stwTheorieen_US
dc.subject.stwRusslanden_US
dc.subject.stwLohnrückständeen_US
dc.subject.stwwage arrearsen_US
dc.titleEquilibrium Wage Arrears: A Theoretical and Empirical Analysis of Institutional Lock-Inen_US
dc.typeWorking Paperen_US
dc.identifier.ppn322363292en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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