Indexation and Incomes Policy: A Study of Wage Adjustment in Unionized Manufacturing

Abstract

Data from nearly 200 collective bargaining units are used to study the frequency of wage change from 1957 to 1978. It is shown that incomes policies during the Kennedy, Johnson, and Nixon administrations encouraged changes in the length of time between wage adjustments. Inflation, often thought to be responsible for fluctuations in the coverage of indexing provisions, is found to play virtually no role. The conclusion is that government intervention in the wageprice process aroused fears that the government will intervene again in the future. In the presence of this uncertainty, the wage adjustment provisions of collective bargaining contracts were changed.