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Transactions Costs and the Employment Contract in the US Economy


  • MacLeod, W. Bentley

    () (Columbia University)

  • Parent, Daniel

    () (HEC Montreal)


In this paper we adapt the model of MacLeod (2007) to provide one way to formally implement some of Williamson's ideas regarding the effect of transactions costs upon employment relationship. We then explore the empirical implications of this model with a data set that measures job characteristics using the Dictionary of Occupational Titles (DOT), and merge this data set with the Panel Study on Income Dynamics (PSID). We find that viewing the data through the lens of transactions costs economics provide a useful way to organize the data on compensation in the US labor market.

Suggested Citation

  • MacLeod, W. Bentley & Parent, Daniel, 2013. "Transactions Costs and the Employment Contract in the US Economy," IZA Discussion Papers 7306, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7306

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    References listed on IDEAS

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    15. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-344, October.
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    Cited by:

    1. Radoslawa Nikolowa, 2014. "Motivate and Select: Relational Contracts with Persistent Types," Working Papers 721, Queen Mary University of London, School of Economics and Finance.
    2. repec:bla:jemstr:v:26:y:2017:i:3:p:624-635 is not listed on IDEAS

    More about this item


    labor markets; transactions costs; compensation;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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