Going on the Long Race? - Employment Duration and (De)Regulation of Experimental Stochastic Labor Markets

Siegfried Berninghaus (), Sabrina Bleich () and Werner Güth ()
Additional contact information
Siegfried Berninghaus: Institut für Wirtschaftstheorie und Operations Research, University of Karlsruhe
Sabrina Bleich: Institut für Wirtschaftstheorie und Operations Research, University of Karlsruhe

No 2009-094, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: If the future market wage is uncertain, engaging in long-term employment is risky, with the risk depending on how regulated the labor market is. In our experiment long-term employment can result either from offering long-term contracts or from repeatedly and mutually opting for rematching. Treatments differ in how regulations restrict the employer's flexibility in adapting the employment contract to changes of the market (wage). All treatments allow for longer contract duration as well as for mutually opting to be rematched. Effort is chosen by employees after a contract is concluded. Treatments vary from no flexibility to no restriction at all. Will more (downward) flexibility be used in ongoing employment but reduce efficiency? If so, deregulation may weaken rather than promote labor market efficiency. And will regulation crowd out long-term employment, either in the form of long-term contracts or voluntary rematching?

Keywords: deregulation; employment contracts; wage flexibility; principal-agent theory; experimental economics; repeated interaction (search for similar items in EconPapers)
JEL-codes: C72 C90 F16 J21 J24 L10 (search for similar items in EconPapers)
Date: 2009-11-12
New Economics Papers: this item is included in nep-cta, nep-exp, nep-lab, nep-mic and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://oweb.b67.uni-jena.de/Papers/jerp2009/wp_2009_094.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2009-094

Access Statistics for this paper

More papers in Jena Economics Research Papers from Friedrich-Schiller-University Jena
Bibliographic data for series maintained by Markus Pasche ().