The Role of Employer-Employee Interactions in Labor Market Cycles: Evidence from the Self-Employed
Self-employed workers are less likely to be affected by implicit contracts, efficiency wages, and other forces that mute wage cyclicality and exacerbate employment cyclicality. This observation motivates the authors' comparison of the cyclical experience of the self-employed with 'wage and salary' workers who clearly have an employer. They find negligible or small differences in annual hours cyclicality between the two groups, but hourly wages and annual earnings are much more cyclical for the self-employed. These results are consistent with efficient contracting models where employers smooth workers' income without causing inefficiencies in hours of work. Copyright 1996 by University of Chicago Press.
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References listed on IDEAS
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- Kevin M. Murphy & Finis Welch, 1992. "The Structure of Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 285-326.
- N. Gregory Mankiw, 1985. "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 100(2), pages 529-538.
- Lawrence F. Katz, 1988.
"Some recent developments in labor economics and their implications for macroeconomics,"
Federal Reserve Bank of Cleveland, pages 507-530.
- Katz, Lawrence F, 1988. "Some Recent Developments in Labor Economics and Their Implications for Macroeconomics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(3), pages 507-522, August.
- Rosen, Sherwin, 1985. "Implicit Contracts: A Survey," Journal of Economic Literature, American Economic Association, vol. 23(3), pages 1144-1175, September.
- Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
- repec:fth:harver:1476 is not listed on IDEAS
- Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-239, May.
- Joshua D. Angrist, 1990. "Does Labor Supply Explain Fluctuations in Average Hours Worked?," NBER Working Papers 3312, National Bureau of Economic Research, Inc.
- Alan B. Krueger, 1991. "Ownership, Agency, and Wages: An Examination of Franchising in the Fast Food Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 75-101.
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