Multiperiod Wage Contracts and Productivity Profiles
AbstractCreditors do not generally honor human capital as collateral. This paper demonstrates how long term wages contracts between workers and firms can circumvent the capital market imperfection. Generation of firm specific skills creates an economic bond between worker and firm. This bond enables the firm to transfer loans to an impatient worker in the form of wages in excess of what the worker is initially worth to the firm. Subsequently, the value of the worker's marginal product to the employer exceeds his spot market value enabling the firm to recoup its loans to the worker through lower wages and still retain his services. The model can be used to identify unobserved increments in a worker's general skills from the observed wage path, and to explain interindustry disparities in wage paths and statistical discrimination by firms.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 644.
Length: 26 pages
Date of creation: 1985
Date of revision:
Other versions of this item:
- Bernhardt, Dan & Timmis, Gerald C, 1990. "Multiperiod Wage Contracts and Productivity Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(4), pages 529-63, October.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- 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.
- Luigi Pistaferri & Luigi Guiso & Fabiano Schivardi, 2010.
"Credit within the firm,"
NBER Working Papers
15924, National Bureau of Economic Research, Inc.
- L. Guiso & L. Pistaferri & F. Schivardi, 2010. "Credit within the firm," Working Paper CRENoS 201009, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Guiso, Luigi & Pistaferri, Luigi & Schivardi, Fabiano, 2010. "Credit within the Firm," CEPR Discussion Papers 7793, C.E.P.R. Discussion Papers.
- Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2009. "Credit within the Firm," Global COE Hi-Stat Discussion Paper Series gd09-097, Institute of Economic Research, Hitotsubashi University.
- 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.
- Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2010. "Credit within the Firm," Economics Working Papers ECO2010/16, European University Institute.
- Scoones, David, 2000. "Matching and competition for human capital," Labour Economics, Elsevier, vol. 7(2), pages 135-152, March.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).
If references are entirely missing, you can add them using this form.