Relational knowledge transfers

Luis Garicano and Luis Rayo

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study how relational contracts mitigate Becker's classic problem of providing general (non-firm-specific) human capital when training contracts are incomplete. The firms profit-maximizing agreement is a multi-period "apprenticeship" in which the novice is trained gradually over time and eventually receives all knowledge. The firm adopts a "1/e rule" whereby at the beginning of the relationship the novice is trained, for free, just enough to produce a fraction 1/e of the efficient output. After that, the novice earns all additional knowledge with labor. This rule causes inefficiently lengthy relationships that grow longer the more patient the players. We discuss policy interventions.

JEL-codes: J01 N0 R14 (search for similar items in EconPapers)
Date: 2017-09-30
New Economics Papers: this item is included in nep-bec, nep-cta, nep-knm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published in American Economic Review, 30, September, 2017, 107(9), pp. 2695-2730. ISSN: 0002-8282

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http://eprints.lse.ac.uk/79076/ Open access version. (application/pdf)

Related works:
Journal Article: Relational Knowledge Transfers (2017)
Working Paper: Relational knowledge transfers (2016)
Working Paper: Relational Knowledge Transfers (2016)
Working Paper: Relational knowledge transfers (2016)
Working Paper: Relational Knowledge Transfers (2013)
Working Paper: Relational Knowledge Transfers (2013)
Working Paper: Relational knowledge transfers (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:79076

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