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Wage-Employment Contracts (Replaced by W0675)

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  • Jerry R. Green

Abstract

This paper studies the efficient agreements about the dependence of workers' earnings on employment, when the employment level is controlled by firms. Under plausible assumptions, such agreements will cause employment to diverge from efficiency as a byproduct of their attempt to mitigate risk. However, employment is above rather than below the efficient level when the conditions of profitability are worse than average. Such a one- period implicit contracting model cannot, therefore, be used to "explain" unemployment as it is traditionally conceived.

Suggested Citation

  • Jerry R. Green, 1981. "Wage-Employment Contracts (Replaced by W0675)," NBER Working Papers 0623, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0623
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    References listed on IDEAS

    as
    1. Laffont, Jean-Jacques & Maskin, Eric, 1980. "A Differential Approach to Dominant Strategy Mechanisms," Econometrica, Econometric Society, vol. 48(6), pages 1507-1520, September.
    2. Hall, Robert E & Lilien, David M, 1979. "Efficient Wage Bargains under Uncertain Supply and Demand," American Economic Review, American Economic Association, vol. 69(5), pages 868-879, December.
    3. Robert Wilson, 1977. "A Bidding Model of Perfect Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 511-518.
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    Cited by:

    1. John Haltiwanger, 1982. "Asymmetric Information, Long Term Labor Contracts, Inefficient Job Separations," UCLA Economics Working Papers 276, UCLA Department of Economics.
    2. Edward P. Lazear, 1983. "Pensions as Severance Pay," NBER Chapters, in: Financial Aspects of the United States Pension System, pages 57-90, National Bureau of Economic Research, Inc.
    3. John Haltiwanger, 1983. "Asymmetric Information, Multiperiod Labor Contracts, and Intertemporal Allocation Problems," UCLA Economics Working Papers 288, UCLA Department of Economics.

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