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Contracts, Individual Revenue and Performance

  • Peter Chinloy

    ()

  • Daniel Winkler

    ()

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    In some jobs individual workers have control over revenue, effort and productivity. These jobs include professional firms for law, medicine and consulting. They include personal services in areas from hair styling to taxi driving. The firm offers contracts that allow for a sharing of risks and rewards. These incentives include a split of output between the firm and worker and employee ownership. For U.S. real estate agents, a choice is available between splitting revenue with the firm or retaining 100 % above a fixed prepaid minimum. These are equity and sequential debt contracts. Under the sequential debt contract, effort increases but output per hour declines. Separately, agents increase effort and productivity if offered ownership in the firm, effectively a claim on others’ performance. Copyright Springer Science+Business Media, LLC 2012

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    File URL: http://hdl.handle.net/10.1007/s12122-012-9147-8
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    Article provided by Springer in its journal Journal of Labor Research.

    Volume (Year): 33 (2012)
    Issue (Month): 4 (December)
    Pages: 545-562

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    Handle: RePEc:spr:jlabre:v:33:y:2012:i:4:p:545-562
    Contact details of provider: Web page: http://www.springer.com/economics/journal/12122

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    1. Sander Wennekers & André van Stel & Roy Thurik & Paul Reynolds, 2005. "Nascent entrepreneurship and the level of economic development," Papers on Entrepreneurship, Growth and Public Policy 2005-14, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    2. Deborah Balser & Anne Winkler, 2012. "Worker Behavior on the Job: A Multi-Methods Study of Labor Cooperation with Management," Journal of Labor Research, Springer, vol. 33(3), pages 388-413, September.
    3. Kamhon Kan & Wei-Der Tsai, 2006. "Entrepreneurship and Risk Aversion," Small Business Economics, Springer, vol. 26(5), pages 465-474, 06.
    4. Gormley, Todd & Liu, Hong & Zhou, Guofu, 2010. "Limited participation and consumption-saving puzzles: A simple explanation and the role of insurance," Journal of Financial Economics, Elsevier, vol. 96(2), pages 331-344, May.
    5. repec:cup:cbooks:9780521828130 is not listed on IDEAS
    6. Berglann, Helge & Moen, Espen R. & Røed, Knut & Skogstrøm, Jens Fredrik, 2009. "Entrepreneurship: Origins and Returns," IZA Discussion Papers 4250, Institute for the Study of Labor (IZA).
    7. Genda, Yuji & Kambayashi, Ryo, 2002. "Declining Self-Employment in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 16(1), pages 73-91, March.
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