We build a dataset of quarterly hours worked for 14 OECD countries. We document that hours are as volatile as output, that a large fraction of labor adjustment takes place along the intensive margin, and that the volatility of hours relative to output has increased over time. We use these data...

A model of self-enforcing stochastic monitoring with investment and production is developed. The optimal contract leads to debt-like and equity-like claims on the firm that are held by symmetrically informed outside investors and rationalizes the separation of these claims in order to...