Limited Commitment Models of the Labour Market

Jonathan Thomas () and Tim Worrall ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

Abstract: We present an overview of models of long-term self-enforcing labour contracts in which risk sharing is the dominant motive for contractual solutions. A base model is developed which is sufficiently general to encompass the two-agent problem central to most of the literature, including variable hours. We consider two-sided limited commitment and look at its implications for aggregate labour market variables. We consider the implications for empirical testing and the available empirical evidence. We also consider the one-sided limited commitment problem for which there exists a considerable amount of empirical support.

Keywords: Labour contracts; self-enforcing contracts; unemployment; business cycle. (search for similar items in EconPapers)
JEL-codes: E32 J41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
Date: Written
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http://www.econ.ed.ac.uk/papers/LabourMarkets.pdf (application/pdf)

Related works:
Working Paper: Limited Commitment Models of the Labour Market (2007)
Working Paper: Limited Commitment Models of the Labor Market (2007)
Journal Article: LIMITED COMMITMENT MODELS OF THE LABOUR MARKET (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:edn:esedps:176

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