Wage Net Discount Rates: Unmasking the Impact of COVID-19
Robert Baumann and David Schap. 2022. Wage Net Discount Rates: Unmasking the Impact of COVID-19. Journal of Legal Economics 28(2): pp. 79-90.
Wage net discount rates (WNDRs) are formulated for the post-1980 era using average weekly earnings growth and various available Treasury instruments of between 3-month and 10-year duration. We examine the time series properties of WNDRs and ﬁnd stronger stationarity evidence exists for subsets of the data compared to the entire sample. The COVID-19 era data present difﬁculties in estimating a mean WNDR from a stationary series. Instead, we recommend a sample frame that ends just prior to the pandemic until more data become available. Using this sample frame, we estimate mean WNDRs from stationary subseries that are within [-1.56, -1.01] across varying Treasury securities
Robert Baumann and David Schap