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Work Incentives and the Demand for Primary and Contingent Labor

  • James B. Rebitzer
  • Lowell J. Taylor

This paper presents an incentive-based dual labor market model. Three implications of the model are emphasized. First, in equilibrium, there is an excess supply of workers to primary jobs. Second, when demand is uncertain, firms may choose a mix of primary and contingent workers to perform the same job, even when these workers are perfect substitutes in production. Third, firms prefer to hire into primary jobs workers with strong job attachment and workers whose preferences lead them to prefer long work hours. We argue that industries with high proportions of part-time workers will tend to have large concentrations of contingent workers. The empirical finding that the wages and benefits of full-time workers are significantly reduced in industries with large concentrations of part-time workers appears consistent with this hypothesis.

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File URL: http://www.nber.org/papers/w3647.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3647.

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Date of creation: Mar 1991
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Publication status: published as Quarterly Journal of Economics November 1991, pp. 1373-1383
Handle: RePEc:nbr:nberwo:3647
Note: LS
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  1. Alan B. Krueger, 1991. "The evolution of unjust-dismissal legislation in the United States," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 44(4), pages 644-660, July.
  2. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
  3. George A. Akerlof & Lawrence F. Katz, 1988. "Workers' Trust Funds and the Logic of Wage Profiles," NBER Working Papers 2548, National Bureau of Economic Research, Inc.
  4. Rebitzer, James B, 1988. "Unemployment, Labor Relations, and Unit Labor Costs," American Economic Review, American Economic Association, vol. 78(2), pages 389-94, May.
  5. Gintis, Herbert & Ishikawa, Tsuneo, 1987. "Wages, work intensity, and unemployment," Journal of the Japanese and International Economies, Elsevier, vol. 1(2), pages 195-228, June.
  6. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  7. Garth L. Mangum & Donald Mayall & Kristin Nelson, 1985. "The temporary help industry: A response to the dual internal labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 38(4), pages 599-611, July.
  8. Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
  9. Jeremy I. Bulow & Lawrence H. Summers, 1985. "A Theory of Dual Labor Markets with Application to Industrial Policy, Discrimination and Keynesian Unemployment," NBER Working Papers 1666, National Bureau of Economic Research, Inc.
  10. Summers, Lawrence H. & Dickens, William T. & Katz, Lawrence F. & Lang, Kevin, 1989. "Employee Crime and the Monitoring Puzzle," Scholarly Articles 3645199, Harvard University Department of Economics.
  11. William T. Dickens & Kevin Lang, 1985. "A Test of Dual Labor Market Theory," NBER Working Papers 1314, National Bureau of Economic Research, Inc.
  12. Lang, Kevin, 1989. "Why was there mandatory retirement?," Journal of Public Economics, Elsevier, vol. 39(1), pages 127-136, June.
  13. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  14. Bowles, Samuel, 1985. "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review, American Economic Association, vol. 75(1), pages 16-36, March.
  15. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
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