Is the Behavior of Hours Worked Consistent with Implicit Contract Theory?
This paper examines the determinants of hours worked when employment relationships are influenced by risk-sharing considerations. The environment considered is an extension of the standard symmetric-information risk-sharing model that allows for the possibility of enforcement problems on the part of both the employer and the employee. The authors show that this class of risk-sharing models unambiguously predicts hours to be influenced by wages only through an income effect. Using data from the Panel Study of Income Dynamics, they find evidence in favor of this extended version of the risk-sharing model. Copyright 1995, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 110 (1995)
Issue (Month): 3 (August)
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