Natural hazard, employment uncertainty, and the choice of labor contracts

Lopamudra Banerjee ()
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Lopamudra Banerjee: Bennington College

Eastern Economic Journal, 2021, vol. 47, issue 2, No 4, 227-252

Abstract: Abstract This paper explores how contractual arrangements emerge in labor markets in response to two risky prospects that employers might face, namely production failure from natural hazard conditions and that from worker non-availability. Modeling the process of contract determination as a dynamic game of symmetric but imperfect information in the presence of power asymmetry between employers and workers, the paper posits, when workers have alternative employment opportunities, and employers seek to avoid labor shortage, employers would choose a ‘fixed’ rather than a ‘variable’ contract and bear the risk of supporting the hired workers even if hazardous conditions may realize later in nature.

Keywords: Labor contracts; Natural hazards; Choice under uncertainties; Q; J; D (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1057/s41302-020-00185-1

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