This paper presents new evidence on the relevance of nominal
contracting models for employment determination in long term union
contracts. A key aspect of these contracts, much emphasized in the
macroeconomics literature, is the predetermined nature of nominal
wages. Real wage rates therefore contain unanticipated components
that reflect unexpected changes in prices and the degree of
indexation in the contract. The empirical analysis, based on a
sample of 1300 indexed and non-indexed contracts from the Canadian
manufacturing sector, indicates that unexpected real wage changes are
associated with systematic employment responses in the opposite
direction. I conclude that nominal contracting provisions play a
potentially important role in the cyclical properties and persistence
of employment in the union sector.

Despite a record of sustained growth in employment in the United States,
there is longstanding concern that the new jobs are of poor quality, implying that the
quality of the stock of jobs in the economy is deteriorating. In fact, it is difficult to define
a new job, much less identify such jobs and evaluate their quality. In this study, I define new
jobs operationally as worker-firm matches that have begun within the last year (i.e., tenure
less than one year), and I investigate the extent to which the quality of new (low tenure)
jobs relative to old (higher tenure) jobs has changed over the period from 1979-1996. I
consider three dimensions of quality: real wages, the rate of part-time employment, and
the rate of coverage by employer-provided health insurance. The empirical analysis relies
on data from eight mobility and benefit supplements to the Current Population Survey
over the period studied. The results are clearcut. Real hourly wages on new jobs have
deteriorated slightly relative to wages on older jobs, but the general patterns of the wage
distribution on new jobs have changed in ways similar to the overall wage distribution (a
large increase in the return to education driven by a large decline in wages for less-skilled
workers). There is no evidence of an increase in the rate of part-time employment on
either new jobs or old jobs so that the quality of new jobs has not changed absolutely
or relative to the quality of older jobs in this dimension. The quality of new jobs has
deteriorated substantially for some workers in the provision of employer-provided health
insurance. Less-educated workers have become substantially less likely to be covered by
or offered health insurance by their employer, and the decline is particularly large on new
jobs. There has been a smaller decline in employer-provided health insurance coverage for
more-educated workers on both old and new jobs, but the decline is no larger on new jobs
than on old jobs. On balance, there has been a decline in the quality of jobs for less-skilled
workers, as measured by the availability of a key fringe benefit, that is especially severe
for new jobs and that reinforces the well-known deterioration of the labor market for
less-skilled workers more generally. There has been relatively little change in the quality
of jobs available to more highly-skilled workers, either on new or on old jobs.