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Contracts, Individual Revenue and Performance


  • Peter Chinloy


  • Daniel Winkler



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

Suggested Citation

  • Peter Chinloy & Daniel Winkler, 2012. "Contracts, Individual Revenue and Performance," Journal of Labor Research, Springer, vol. 33(4), pages 545-562, December.
  • Handle: RePEc:spr:jlabre:v:33:y:2012:i:4:p:545-562 DOI: 10.1007/s12122-012-9147-8

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    References listed on IDEAS

    1. 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.
    2. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    3. 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.
    4. Sander Wennekers & André Stel & Roy Thurik & Paul Reynolds, 2008. "Nascent entrepreneurship and the level of economic development," Small Business Economics, Springer, vol. 30(3), pages 325-325, March.
    5. Berglann, Helge & Moen, Espen R. & Røed, Knut & Skogstrøm, Jens Fredrik, 2011. "Entrepreneurship: Origins and returns," Labour Economics, Elsevier, vol. 18(2), pages 180-193, April.
    6. Kamhon Kan & Wei-Der Tsai, 2006. "Entrepreneurship and Risk Aversion," Small Business Economics, Springer, vol. 26(5), pages 465-474, June.
    7. Parker,Simon C., 2006. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521030632, March.
    8. 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.
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    More about this item


    Debt contracts; Effort; Productivity; D81; J23; M13;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups


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