Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
The effects of firm‐specific shocks on the gain from writing state‐contingent wage contracts are examine in an extension of the model in Gottfries (1992). It is shown that the introduction of firm‐specific uncertainty increases the gain from indexation to prices only moderately. Moreover, nominal wage contracts should be more prevalent when unemployment benefits are high or unemployment spells are short.