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Technological Change,Labour Contracts and Income Distribution

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  • Fredrik Andersson

    (Department of Economics, Lund University, Sweden)

Abstract

An overlapping-generations model is developed; human capital, embodied in education and general on-the-job training, is important, necessitating investments in the first period of work. Competition among employers combined with shortterm contracting imposes an incentive constraint on the intertemporal wage payments which is costly due to creditmarket imperfections. Workers work too much and are paid too little in the first period. Exogenous technological change complementary with skills aggravates the wage distortion, thereby inducing compensating wage increases. Income taxes mitigate the distortions.

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Bibliographic Info

Article provided by Finnish Economic Association in its journal Finnish Economic Papers.

Volume (Year): 15 (2002)
Issue (Month): 1 (Spring)
Pages: 24-35

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Handle: RePEc:fep:journl:v:15:y:2002:i:1:p:24-35

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Web page: http://www.taloustieteellinenyhdistys.fi
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  1. Hermalin, Benjamin, 1990. "Adverse Selection, Short-Term Contracting, and the Underprovision of On-the-Job Training," Department of Economics, Working Paper Series qt3636n9n2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. David E. Wildasin, 2000. "Labor-Market Integration, Investment in Risky Human Capital, and Fiscal Competition," American Economic Review, American Economic Association, vol. 90(1), pages 73-95, March.
  3. Robert Gibbons & Michael Waldman, 1999. "A Theory Of Wage And Promotion Dynamics Inside Firms," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1321-1358, November.
  4. Oliver Hart & John Moore, 1991. "A Theory of Debt Based on the Inalienability of Human Capital," STICERD - Theoretical Economics Paper Series /1991/233, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  5. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  6. Rebitzer, James B & Taylor, Lowell J, 1995. "Do Labor Markets Provide Enough Short-Hour Jobs? An Analysis of Work Hours and Work Incentives," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 257-73, April.
  7. Andersson, Fredrik, 1996. "Income taxation and job-market signaling," Journal of Public Economics, Elsevier, vol. 59(2), pages 277-298, February.
  8. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
  9. Anderberg, Dan & Andersson, Fredrik, 2000. "Social Insurance with Risk-Reducing Investments," Economica, London School of Economics and Political Science, vol. 67(265), pages 37-56, February.
  10. Ritter, Joseph A & Taylor, Lowell J, 1994. "Workers as Creditors: Performance Bonds and Efficiency Wages," American Economic Review, American Economic Association, vol. 84(3), pages 694-704, June.
  11. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
  12. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
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