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Up-or-Out Contracts: A Signaling Perspective

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  • Michael Waldman

    (UCLA)

Abstract

A firm will typically gather information concerning its own workers that is not available to other potential employers, while other firms will attempt to reduce this information asymmetry by observing the actions of the initial employer. The author argues that this process can be important in environments characterized by up-or-out contracts in that the retentions decision can serve as a signal of productivity. The article investigates this argument in an environment where in-or-out contracts are employed because they provide workers with an incentive to accumulate general human capital and where learning takes place in a diffuse fashion. Copyright 1990 by University of Chicago Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Michael Waldman, 1989. "Up-or-Out Contracts: A Signaling Perspective," UCLA Economics Working Papers 556, UCLA Department of Economics.
    • Handle: RePEc:cla:uclawp:556
    as

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    References listed on IDEAS

    as
    1. Rosen, Sherwin, 2007. "Studies in Labor Markets," National Bureau of Economic Research Books, University of Chicago Press, number 9780226726304, March.
    2. repec:ucp:bknber:9780226726281 is not listed on IDEAS
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    4. Novos, I.E., 1988. "Worker Preferences And Firm Structure," Papers m8821, Southern California - Department of Economics.
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    8. Paul Milgrom & Sharon Oster, 1987. "Job Discrimination, Market Forces, and the Invisibility Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 102(3), pages 453-476.
    9. Michael Waldman, 1984. "Job Assignments, Signalling, and Efficiency," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 255-267, Summer.
    10. Kahn, Charles & Huberman, Gur, 1988. "Two-sided Uncertainty and "Up-or-Out" Contracts," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 423-444, October.
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