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A Test of Lazear's Theory of Delayed Payment Contracts

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  • Hutchens, Robert M

Abstract

According to Edward P. Lazear, workers and firms enter into long-term implicit contracts that discou rage shirking and malfeasance by shifting compensation to the end of the contract. Such "delayed payment" contracts are less likely to o ccur in jobs in which it is comparatively simple to monitor worker ef fort. This paper uses data from the National Longitudinal Survey and the Dictionary of Occupational Titles to test that hypothesis. In par ticular, it tests whether jobs that involve repetitive tasks tend to be characterized by an absence of pensions, mandatory retirement, lon g job tenures, and high wages for older workers. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Hutchens, Robert M, 1987. "A Test of Lazear's Theory of Delayed Payment Contracts," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 153-170, October.
  • Handle: RePEc:ucp:jlabec:v:5:y:1987:i:4:p:s153-70
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    References listed on IDEAS

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    1. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    2. Abraham, Katharine G & Farber, Henry S, 1987. "Job Duration, Seniority, and Earnings," American Economic Review, American Economic Association, vol. 77(3), pages 278-297, June.
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    Cited by:

    1. David Neumark, 2008. "The Age Discrimination in Employment Act and the Challenge of Population Aging," NBER Working Papers 14317, National Bureau of Economic Research, Inc.
    2. Zwick, Thomas, 2011. "Seniority wages and establishment characteristics," Labour Economics, Elsevier, vol. 18(6), pages 853-861.
    3. Johnson, Richard W., 1997. "Pension Underfunding and Liberal Retirement Benefits Among State and Local Government Workers," National Tax Journal, National Tax Association, vol. 50(1), pages 113-42, March.
    4. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    5. Chen, Xuanjuan & Yao, Tong & Yu, Tong & Zhang, Ting, 2014. "Learning and incentive: A study on analyst response to pension underfunding," Journal of Banking & Finance, Elsevier, vol. 45(C), pages 26-42.
    6. Alberto Bayo-Moriones, 2001. "Seniority-based pay: is it used as a motivation device?," Working Papers 0103, Departament Empresa, Universitat Autònoma de Barcelona, revised May 2001.
    7. Steven Stern & Petra Todd, 2000. "A Test Of Lazear’S Mandatory Retirement Model," Virginia Economics Online Papers 391, University of Virginia, Department of Economics.
    8. Zwick, Thomas, 2008. "The Employment Consequences of Seniority Wages," ZEW Discussion Papers 08-039, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Bayo-Moriones, Alberto & Galdon-Sanchez, Jose Enrique & Güell, Maia, 2004. "Is Seniority-Based Pay Used as a Motivation Device? Evidence from Plant Level Data," IZA Discussion Papers 1321, Institute for the Study of Labor (IZA).
    10. Zwick, Thomas, 2009. "Why Pay Seniority Wages?," ZEW Discussion Papers 09-005, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Brown, Byron W. & Woodbury, Stephen A., 1998. "Seniority, external labor markets, and faculty pay," The Quarterly Review of Economics and Finance, Elsevier, vol. 38(4), pages 771-798.
    12. repec:eee:labchp:v:3:y:1999:i:pc:p:3261-3307 is not listed on IDEAS
    13. Arjan Heyma & Siemen Werff & Aukje Nauta & Guurtje Sloten, 2014. "What Makes Older Job-Seekers Attractive to Employers?," De Economist, Springer, vol. 162(4), pages 397-414, December.
    14. Johnson, Richard W., 1997. "Pension Underfunding and Liberal Retirement Benefits Among State and Local Government Workers," National Tax Journal, National Tax Association, vol. 50(1), pages 113-142, March.
    15. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    16. Huck, Steffen & Seltzer, Andrew & Wallace, Brian, 2004. "Deferred Compensation and Gift Exchange: An Experimental Investigation into Multi-Period Labor Markets," IZA Discussion Papers 1193, Institute for the Study of Labor (IZA).
    17. Ochsen, Carsten, 2015. "The Ins and Outs of German Unemployment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113223, Verein für Socialpolitik / German Economic Association.
    18. Ochsen, Carsten, 2009. "Regional labor markets and aging in Germany," Thuenen-Series of Applied Economic Theory 102, University of Rostock, Institute of Economics.
    19. Lazear, Edward P, 1999. "Personnel Economics: Past Lessons and Future Directions: Presidential Address to the Society of Labor Economists, San Francisco, May 1, 1998," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 199-236, April.
    20. Joseph A. Ritter & Lowell J. Taylor, 1997. "Economic models of employee motivation," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 3-21.
    21. Edward P. Lazear, 1991. "Labor Economics and the Psychology of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 89-110, Spring.
    22. Edward P. Lazear, 1999. "Personnel Economics: Past Lessons and Future Directions," NBER Working Papers 6957, National Bureau of Economic Research, Inc.
    23. Axel Anderson & Lones Smith, 2006. "Assortative Matching and Reputation," Cowles Foundation Discussion Papers 1553, Cowles Foundation for Research in Economics, Yale University.
    24. Mario Bossler, 2015. "The efficiency wage effect of employer provided occupational pensions," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-17, December.
    25. Bognanno, Michael L. & Delgado, Lisa, 2005. "Job Displacement Penalties in Japan," IZA Discussion Papers 1650, Institute for the Study of Labor (IZA).

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