Incentive-Compatible Long-term Contracts and Job Rationing
AbstractThis article presents a model in which markets for long-term contractual employment coexist with spot markets for labor. Assuming the absence of third-party enforcement, wage contracts are required to be incentive compatible. As a consequence, contract wages yield higher expected utility to the worker than spot-market wages so that, in equilibrium, contractual long-term jobs are rationed. Copyright 1989 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Labor Economics.
Volume (Year): 7 (1989)
Issue (Month): 2 (April)
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Web page: http://www.journals.uchicago.edu/JOLE/
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- Black, Dan A. & Loewenstein, Mark A., 1997.
"Dismissals and match-specific rents,"
Elsevier, vol. 4(4), pages 325-340, December.
- Bruce Fallick & Charles A. Fleischman, 2004. "Employer-to-employer flows in the U.S. labor market: the complete picture of gross worker flows," Finance and Economics Discussion Series 2004-34, Board of Governors of the Federal Reserve System (U.S.).
- Arai, Kazuhiro, 1997. "Cooperation, job security, and wages in a dual labor market equilibrium," The Journal of Socio-Economics, Elsevier, vol. 26(1), pages 39-57.
- Bruce C. Fallick & Charles A. Fleischman, 2001. "The importance of employer-to-employer flows in the U.S. labor market," Finance and Economics Discussion Series 2001-18, Board of Governors of the Federal Reserve System (U.S.).
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