Incentive-Compatible Long-term Contracts and Job Rationing.

This article presents a model in which markets for long-term contractual employment coexist with spot markets for labor. Assuming the absence of third-party enforcement, wage contracts are required to be incentive compatible. As a consequence, contract wages yield higher expected utility to the worker than spot-market wages so that, in equilibrium, contractual long-term jobs are rationed. Copyright 1989 by University of Chicago Press.

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Year of publication:	1989
Authors:	Bester, Helmut
Published in:	Journal of Labor Economics. - University of Chicago Press. - Vol. 7.1989, 2, p. 238-55
Publisher:	University of Chicago Press

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Extent:	application/pdf
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005725764