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The Labour Market and Corporate Structure

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Author Info
Acemoglu, Daron
Newman, Andrew

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Abstract

This paper analyses the impact of labour demand and labour market regulations on the corporate structure of fims. It finds that higher wages are associated with lower monitoring, irrespective of whether these high wages are caused by labour market regulations, unions or higher labour demand. These comparative static results are in line with the broad trends in the data. The paper also finds that the organization of firms has important macroeconomic implications. In particular, monitoring is a type of ‘rent-seeking’ activity and the decentralized equilibrium spends excessive resources on monitoring. Labour market regulations that reduce monitoring by pushing wages up may increase net output or reduce it only by a small amount even though they reduce employment.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1708.

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Date of creation: Oct 1997
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Handle: RePEc:cpr:ceprdp:1708

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Related research
Keywords: Corporate Structure; Efficiency Wages; Labour Market Regulation; Monitoring; Moral Hazard;

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Find related papers by JEL classification:
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Daron Acemoglu, 2000. "Credit Market Imperfections and Persistent Unemployment," NBER Working Papers 7938, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Patrick Legros & Andrew F. Newman & Eugenio Proto, 2006. "Smithian Growth through Creative Organization," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-158, Boston University - Department of Economics. [Downloadable!]
    Other versions:
  3. DiNardo, John & Hallock, Kevin F. & Pischke, Jörn-Steffen, 2000. "Unions and the Labor Market for Managers," IZA Discussion Papers 150, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Linus Wilson, 2003. "Hard Debt, Soft CEO’s and Union Rents," OFRC Working Papers Series 2003fe12, Oxford Financial Research Centre. [Downloadable!]
  5. Linus Wilson, 2003. "Hard Debt, Soft CEO`s and Union Rents," Economics Series Working Papers 170, University of Oxford, Department of Economics. [Downloadable!]
  6. John McLaren, 2000. ""Globalization" and Vertical Structure," American Economic Review, American Economic Association, vol. 90(5), pages 1239-1254, December. [Downloadable!] (restricted)
  7. Marcel Fafchamps & Måns Söderbom, 2004. "Wages and Labor Management in African Manufacturing," Development and Comp Systems 0409043, EconWPA. [Downloadable!]
    Other versions:
  8. Paul Beaudry & Patrick Francois, 2005. "Managerial Skill Acquisition and the Theory of Economic Development," NBER Working Papers 11451, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Anthony M. Marino & John G. Matsusaka & Jan Zabojnik, 2006. "Disobedience and Authority," Working Papers 1109, Queen's University, Department of Economics. [Downloadable!]
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This page was last updated on 2009-11-25.

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