Multiperiod Wage Contracts and Productivity Profiles
AbstractWhen creditors do not honor human capital as collateral, firms can mediate financially by offering workers long-term wage contracts. The optimal contract specifies a wage consisting of a spot general skill component plus a component equal to the expected time-averaged value of the worker's specific skills with a competitor. Variations in the smoothed specific component are due only to changes in expectation about the likelihood of quitting a competing firm. The theory also explains interindustry disparities in wage paths and statistical discrimination by firms. Copyright 1990 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): 8 (1990)
Issue (Month): 4 (October)
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Other versions of this item:
- Jerry Timmins & Dan Bernhardt, 1985. "Multiperiod Wage Contracts and Productivity Profiles," Working Papers 644, Queen's University, Department of Economics.
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- Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2010.
"Credit within the Firm,"
EIEF Working Papers Series
1008, Einaudi Institute for Economics and Finance (EIEF), revised Apr 2010.
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- Lam, Kit-Chun & Liu, Pak-Wai, 2000. "Verifiable wage offers and recontracting: effect on wage and consumption profiles," Labour Economics, Elsevier, vol. 7(4), pages 449-462, July.
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- Scoones, David, 2000. "Matching and competition for human capital," Labour Economics, Elsevier, vol. 7(2), pages 135-152, March.
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