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A note on labor contracts with private information and household production

Author

Listed:
  • Ed Nosal
  • Richard Rogerson
  • Randall Wright

Abstract

A classic result in the theory of implicit contract models with asymmetric information is that “underemployment” results if and only if leisure is an inferior good. We introduce household production into the standard implicit contract model and show that we can have underemployment at the same time that leisure is a normal good.

Suggested Citation

  • Ed Nosal & Richard Rogerson & Randall Wright, 1991. "A note on labor contracts with private information and household production," Staff Report 131, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmsr:131
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    References listed on IDEAS

    as
    1. Grossman, Sanford J & Hart, Oliver D, 1981. "Implicit Contracts, Moral Hazard, and Unemployment," American Economic Review, American Economic Association, vol. 71(2), pages 301-307, May.
    2. Gronau, Reuben, 1987. "Home production -- A survey," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 4, pages 273-304 Elsevier.
    3. Kahn, Charles M. & Green, Jerry, 1983. "Wage-Employment Contracts," Scholarly Articles 3203642, Harvard University Department of Economics.
    4. Juster, F Thomas & Stafford, Frank P, 1991. "The Allocation of Time: Empirical Findings, Behavioral Models, and Problems of Measurement," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 471-522, June.
    5. Jess Benhabib & Randall Wright & Richard Rogerson, 1990. "Homework in Macoreconomics I: Basic Theory (Part I of II)," NBER Working Papers 3344, National Bureau of Economic Research, Inc.
    6. Jeremy Greenwood & Zvi Hercowitz, 1990. "The allocation of goods and time over the business cycle," Discussion Paper / Institute for Empirical Macroeconomics 26, Federal Reserve Bank of Minneapolis.
    7. Cooper, Russell, 1983. "A note on overemployment/underemployment in labor contracts under asymmetric information," Economics Letters, Elsevier, vol. 12(1), pages 81-87.
    8. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1990. "Homework In Macroeconomics I: Basic Theory," Working Papers 90-17, C.V. Starr Center for Applied Economics, New York University.
    9. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1990. "Homework In Macroeconomics Ii: Aggregate Fluctuations," Working Papers 90-18, C.V. Starr Center for Applied Economics, New York University.
    10. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 37-50.
    11. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
    12. Gronau, Reuben, 1980. "Home Production-A Forgotten Industry," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 408-416, August.
    13. Rios-Rull, Jose-Victor, 1993. "Working in the Market, Working at Home, and the Acquisition of Skills: A General-Equilibrium Approach," American Economic Review, American Economic Association, vol. 83(4), pages 893-907, September.
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    Cited by:

    1. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991. "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1166-1187, December.

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