On the Supply of Landlord Labor in Small Real Estate Rental Firms

John Glascock and Geoffrey K Turnbull

The Journal of Real Estate Finance and Economics, 1994, vol. 8, issue 1, 33 pages

Abstract: Small real estate rental firms in the United States tend to be employee-owner firms in which the landlord does maintenance and repairs as a part-time job rather than the principal-agent firms in which the landlord hires part-time workers. Applying work incentives theory to explain this observation, we find that the difference in incentive compatibility conditions for the two forms of organization provides a bias toward the employee-owner form of organization for sufficiently small-scale operations. By supplying labor to the firm, the landlord avoids transferring economic rents to contract labor; rents that function as incentives for assuring profit-maximizing maintenance effort even when worker productivity is at its lowest. Copyright 1994 by Kluwer Academic Publishers

Date: 1994
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