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Layoff Unemployment, Risk Shifting, and Productivity

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  • Kenneth S. Chan
  • Yannis M. Ioannides

Abstract

This paper is concerned with the theory of implicit labor contracts. The implications of introducing hours worked or effort as an argument both in workers' utility functions (in addition to the wage rate) and in firms' production functions (in addition to the number of workers) are considered. It is shown that layoffs can occur at equilibrium in the absence of unemployment compensation and value of leisure, but only because of the inclusion of this additional variable.

Suggested Citation

  • Kenneth S. Chan & Yannis M. Ioannides, 1982. "Layoff Unemployment, Risk Shifting, and Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(2), pages 213-229.
    • Handle: RePEc:oup:qjecon:v:97:y:1982:i:2:p:213-229.
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    File URL: http://hdl.handle.net/10.2307/1880755
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    Cited by:

    1. R.W. Fraser, 1982. "Inventories and a Firm's Incentive for Wage Constraints," Economics Discussion / Working Papers 82-23, The University of Western Australia, Department of Economics.

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