Equilibrium Long-Term Labor Contracts

摘要: The paper presents a labor market equilibrium analysis of implicit contract theory. A two-period, single-good model is used to propose consistent notions for long-term employment contracts both when specialized and cannot move in the second period there free mobility without costs. result that emerge even costs novel contrary common beliefs. main features are (risk-neutral) firms will insure (risk-averse) workers against downside risk, yielding downward rigid wages. Wages not fully (as earlier work on theory) because may quit wages have be bid up retain them. firm gets its return insurance deal by paying less than marginal product first period. resulting best lies between productive efficiency full insurance. Workers gain from comparison spot markets; whereas owners not. In with skills exist transfer payments such parties better off within an contracts.