Implicit Contracts, Labor Mobility, and Unemployment
AbstractFirms' inability to monitor their employees' search effort forces a tradeoff between risk-bearing and incentive considerations when designing employment-related insurance. Since the provision of insurance against firm-specific shocks adversely affects workers' incentives to find better jobs, the optimal contract provides only partial insurance: it prescribes low (high) wages and under (over) employment to encourage workers to leave (stay) at low (high) productivity firms; and it employs quits and layoffs as alternative means of inducing separations at low productivity firms, with the mix depending upon the relative efficiency of the on- and off-the-job search technologies. Our analysis of implicit contracts with asymmetric search information establishes that any consistent explanation for worksharing, layoffs, severance pay, quits and unemployment must focus on questions of labor mobility.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 78 (1988)
Issue (Month): 5 (December)
Other versions of this item:
- Richard Arnott & Arthur Hosios & Joseph Stiglitz, 1983. "Implicit Contracts, Labour Mobility and Unemployment," Working Papers 543, Queen's University, Department of Economics.
- Richard J. Arnott & Arthur Hosios & Joseph Stiglitz, 1990. "Implicit Contracts, Labor Mobility and Unemployment," NBER Working Papers 2316, National Bureau of Economic Research, Inc.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Joseph E. Stiglitz, 2002.
"Information and the Change in the Paradigm in Economics,"
American Economic Review,
American Economic Association, vol. 92(3), pages 460-501, June.
- Stiglitz, Joseph E., 2001. "Information and the Change in the Paradigm in Economics," Nobel Prize in Economics documents 2001-8, Nobel Prize Committee.
- Sherwin Rosen, 1985.
"Implicit Contracts: A Survey,"
NBER Working Papers
1635, National Bureau of Economic Research, Inc.
- Lam, Kit-Chun & Liu, Pak-Wai & Wong, Yue-Chim, 1995. "Wage structure when wage offers are private," Labour Economics, Elsevier, vol. 2(1), pages 19-32, March.
- Burguet, Roberto & Caminal, Ramón, 2004.
"Does the Market Provide Sufficient Employment Protection?,"
CEPR Discussion Papers
4198, C.E.P.R. Discussion Papers.
- Burguet, Roberto & Caminal, Ramon, 2008. "Does the market provide sufficient employment protection?," Labour Economics, Elsevier, vol. 15(3), pages 406-422, June.
- Jahn, Elke J. & Wagner, Thomas, 2005. "Contractual Employment Protection and the Scarring Risk of Unemployment," IZA Discussion Papers 1813, Institute for the Study of Labor (IZA).
- Tuulia Hakola, 2002. "Economic Incentives and Labour Market Transitions of the Aged Finnish Workforce," Research Reports 89, Government Institute for Economic Research Finland (VATT).
- Tomi Kyyrä & Ralf A. Wilke, 2007.
"Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland,"
Journal of the European Economic Association,
MIT Press, vol. 5(1), pages 154-182, 03.
- Tomi Kyyrä & Ralf Wilke, 2004. "Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland," Discussion Papers 346, Government Institute for Economic Research Finland (VATT).
- Kyyrä, Tomi & Wilke, Ralf A., 2004. "Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland," ZEW Discussion Papers 04-63, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Bengt Holmstrom, 1980.
"Equilibrium Long-Term Labor Contracts,"
414R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Guerrazzi, Marco & Meccheri, Nicola, 2012. "From wage rigidity to labour market institution rigidity: A turning-point in explaining unemployment?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(2), pages 189-197.
- Tsoulouhas, Theofanis, 1996.
"Labor and credit contracts with asymmetric information and bankruptcy,"
European Economic Review,
Elsevier, vol. 40(8), pages 1665-1682, November.
- Theofanis Tsoulouhas, . "Labor and Credit Contracts with Asymmetric Information and Bankruptcy," Working Paper Series 20, North Carolina State University, Department of Economics.
- Jonathan P. Thomas, 2000.
"Fair pay and a Wagebill Argument for Wage Rigidity and Excessive Employment Variability,"
Labor and Demography
- Jonathan Thomas, 2000. "Fair Pay and a Wagebill Argument for Wage Rigidity and Excessive Employment Variability," CESifo Working Paper Series 234, CESifo Group Munich.
- Jonathan P. Thomas, 1999. "Fair Pay and a Wagebill Arguement for Wage Rigidity and Excessive Employment Variability," Discussion Paper Series, Department of Economics 199919, Department of Economics, University of St. Andrews.
- Jonathan P. Thomas, 2001. "Fair pay and a Wagebill Argument for Wage Rigidity and Excessive Employment Variability," Labor and Demography 0012001, EconWPA.
- Engström, Per, 2002. "Optimal Non-Linear Income Taxation in Search Equilibrium," Working Paper Series 2002:18, Uppsala University, Department of Economics.
- Tomi Kyyrä & Ralf A. Wilke, 2006. "Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland Revised," Discussion Papers 396, Government Institute for Economic Research Finland (VATT).
- Wang, Yanguo & Jaenicke, Edward C., 2005. "Pooling, Separating, and Cream-Skimming In Relative-Performance Contracts," 2005 Annual meeting, July 24-27, Providence, RI 19522, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Wang, Yanguo & Jaenicke, Edward C., 2005. "Pooling, Separating, and Cream-Skimming In Relative-Performance Contracts," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24639, European Association of Agricultural Economists.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.