A hedonic analysis of principal-agent employment contracts is developed, in which workers and employers exchange labor services and contractual payment patterns, and is applied to contract data from a household-level survey in rural China in 1935. The results indicate that credit-market...

This paper presents a simple general equilibrium model in which unemployed workers search for jobs and vacant firms search for employees. Formally, the author develops a two-sector, constrained efficient version of the Diamond-Mortensen-Pissarides matching model of trade coordination. This...

In this paper, the authors describe the sequential equilibria of a two-period monopoly with asymmetric information and limited commitment in the market for accident insurance. The role of learning is analyzed, and the possible sequential pooling, semiseparating, and separating equilibria are...

Recent analyses of unemployment-vacancy series suggest that aggregate shocks, rather than sectoral shocks, are the primary factors responsible for unemployment fluctuations. This inference follows from two widely held beliefs: sectoral shocks induce only positive unemployment-vacancy...

Contract and search theories are integrated to provide a consistent explanation of contract formation, the intertemporal structure of labor markets, the absence of ex post clearing, and thus of unemployment in a contractual setting. Self-fulfilling equilibria are described in which...

This paper describes a simple framework for evaluating the allocative performance of economies characterized by trading frictions and unemployment. This framework integrates the normative results of earlier Diamond-Mortensen-Pissarides bilateral matching-bargaining models of trade coordination...