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Author: J. Thomas
Publisher:
ISBN:
Category : Economics
Languages : en
Pages :
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Author: J. Thomas
Publisher:
ISBN:
Category : Economics
Languages : en
Pages :
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Author: Martin Dumav
Publisher:
ISBN:
Category : Industrial productivity
Languages : en
Pages : 66
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Book Description
We show theoretically that, in the presence of persistent productivity shocks, the reliance on self-enforcing contracts due to limited legal enforcement may provide a possible rationale why countries with the worse rule of law might exhibit: (i) higher aggregate TFP volatilities, (ii) larger dispersion of firm-level productivity, and (iii) greater wage inequality. We also provide suggestive empirical evidence consistent with the model's aggregate implications. Finally, we relate the model's firm-level implications to existing empirical findings.
Author: Sahin Avcioglu
Publisher:
ISBN:
Category :
Languages : en
Pages : 65
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This paper examines the effects of various labor market institutions on the welfare of workers and employers. We consider self-enforcing contracts between risk-averse workers and risk-neutral employers in a labor market with search frictions. Employers promise to smooth out shocks to wages while workers promise long-term commitment to employers. In this environment, any regulatory policy can make it easier or harder for employers to keep their promise of wage smoothing, thus influencing the benefit accruing to each party. In our approach, we analyze the joint effect of policies by distinguishing between the financing and spending of funds used in the regulation of the labor market. With regard to financing, firing taxes strictly dominate hiring and payroll taxes on efficiency grounds, whereas the relative ranking of hiring and payroll taxes depend on the type of equilibrium that realizes. On the spending side, while unemployment payment increases workers' welfare at the expense of employers, in-work benefit in the form of a one-off wage subsidy leaves workers' welfare intact but may increase the welfare of employers.
Author: James William Maw
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Arnab K. Basu
Publisher:
ISBN:
Category :
Languages : en
Pages : 39
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Book Description
Fixed-term contract employment has increasingly replaced regular open-ended employment as the predominant form of employment notably in developing countries. Guided by factory-level evidence showing nuanced patterns of co-movements of regular and contract wages, we propose a two-tiered task based model with self-enforcing contracts in which firms allocate complex tasks to long term employees at incentive compatible wages, and routine tasks to fixed term employees at acceptable wages.We show that the advent of contract employment effectively lowers the cost of maintaining worker discipline, and demonstrate the conditions under which a positive change in labor demand can end up increasing the share of contract employees. We then argue that the contract employment phenomenon sheds light on two margins of hiring distortions - respectively task assignment and total employment distortions - against which the effectiveness of a suite of oft proposed labor market exibility policies should be assessed.
Author: Kanemoto, Yoshitsugu
Publisher: Montréal : Université de Montréal, Centre de recherche et développement en économique
ISBN: 9782893820859
Category :
Languages : en
Pages : 19
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Author: William Bentley MacLeod
Publisher: Kingston, Ont. : Institute for Economic Research, Queen's University
ISBN:
Category : Incentives in industry
Languages : en
Pages : 64
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Author: Huanxing Yang
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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I develop a model of nonstationary relational contracts in order to study internal wage dynamics. Workers are heterogeneous, and each worker's ability is both private information and fixed for all time. Learning therefore occurs within employment relationships. The inferences, however, are confounded by moral hazard. Incentive provision is restricted by an inability to commit to long-term contracts. Relational contracts, which must be self-enforcing, must therefore be used. The wage dynamics in the optimal contract, which are pinned down by the tension between incentive provision and contractual enforcement, are intimately related to the learning effect.
Author: Clive Bull
Publisher:
ISBN:
Category : Employment (Economic theory)
Languages : en
Pages : 37
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Author: Paula Cordero Salas
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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This paper studies the effect bargaining power has on self-enforcing contracts. Optimal contracts are characterized under three enforcement regimes. When enforcement is absent, I show that as the agent's bargaining power increases, her incentive payments decrease even though her total compensation increases. Thus, efficiency wage contracts are more likely to be observed than contingent performance contracts in markets where agents have bargaining power. Self-enforcement is sustainable for any distribution of bargaining power when contracts are partially enforceable. Yet, when contracts are too costly to enforce or not enforceable at all good faith agreements collapse if the agent holds all bargaining power. In this case, the agent is better off exercising less bargaining power than what she has.
