Wage-Employment Contracts (Replaced by W0675) / Jerry R. Green.

By:

Green, Jerry R

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w0623.Publication details: Cambridge, Mass. National Bureau of Economic Research 1981.Description: 1 online resource: illustrations (black and white)Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

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.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w0623 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w0620 Inventories and Sticky Prices: More on the Microfoundations of Macroeconomics /	nber w0621 Output Fluctuations and Gradual Price Adjustment /	nber w0622 The Real Interest Rate: An Empirical Investigation /	nber w0623 Wage-Employment Contracts (Replaced by W0675) /	nber w0624 An Intertemporal Analysis of Taxation and Work Disincentives: An Analysis of the Denver Income Maintenance Experiment /	nber w0625 Explanations of Exchange Rate Volatility and Other Empirical Regularities in Some Popular Models of the Foreign Exchange Market /	nber w0626 A Model of Stochastic Process Switching /	Next

1981.

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.