Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83931
Authors: 
Pourpourides, Panayiotis M.
Year of Publication: 
2010
Series/Report no.: 
Cardiff Economics Working Papers E2007/19
Abstract: 
To examine the cyclical behavior of the skill-premium, this paper introduces implicit labor contracts in a DSGE model where production is characterized by capital-skill complementarity and the utilization of capital is endogenous. It is shown that this model can reproduce the observed cyclical patterns of wages and the skill-premium. The feature of capital-skill complementarity coupled with variable capital utilization rates does not come at odds with the acyclical behavior of the skill-premium. The paper argues that the skill-complementarity of capital is not a quantitatively signiÖcant factor at high frequencies. The key aspects are the contracts and the capital utilization margin.
Subjects: 
Implicit Contracts
Wages
Skill-Premium
Business Cycles
CapitalSkill Complementarity
JEL: 
E13
E24
E32
Document Type: 
Working Paper

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