IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

I vincoli al licenziamento come "commitment device" nei contratti impliciti incentivanti

Listed author(s):
  • Scoppa Vincenzo

Labor contracts establishing performance related pay incur on a firm's moral hazard problem when there are no verifiable measures of performance. Some models have explored the possibility that such contracts can be enforced through a mechanism of firm's reputation. MacLeod and Malcomson (1998) show alternatively how these contracts can be enforced thanks to the existence of an excess of demand (job vacancy) on the labor markets. However, when reputation is difficult to establish and when labor markets are in excess of supply (involuntary unemployment), these mechanisms cannot be activated. In this paper, through a simple model an alternative enforcement mechanism is proposed for performance-related pay contracts based on a widely diffused form of labor market institutional rigidity: the employment protection legislation, that is, the combination of just-cause and firing costs imposed on the firms who dismiss workers. In a game theoretical structure with repeated prisoner's dilemma, these institutional rigidities combined with intrafirm reputation act as commitment devices for the firm and allow the enforcement of implicit contracts. The market equilibrium achieved is compared with an efficiency wage equilibrium and it is showed that the latter is Pareto-dominated. The model in this way shows an efficiency-enhancing role for job security provisions in asymmetric information contexts.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers

File URL:
Download Restriction: no

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Società editrice il Mulino in its journal Politica economica.

Volume (Year): (2001)
Issue (Month): 1 ()
Pages: 47-72

in new window

Handle: RePEc:mul:je8794:doi:10.1429/1569:y:2001:i:1:p:47-72
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mul:je8794:doi:10.1429/1569:y:2001:i:1:p:47-72. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.