INCENTIVE CONTRACTS AND TOTAL FACTOR PRODUCTIVITY

摘要: We propose a transactions cost theory of total factor productivity (TFP). In world with asymmetric information and costs, must be induced by incentive schemes. Labor contracts trade off marginal benefits costs effort. The latter include, in addition to the workers' disutility effort, organizational rents. As economy grows, change endogenously, inducing higher effort productivity. Transactions are also affected societal characteristics that determine power incentives. Differences these may explain cross-economy differences. Numerical experiments demonstrate model's consistency time-series cross-country observations.