Implicit Labour Contracts and Firm-Specific Human Capital

Roger Wilkins ()

No 618, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: This paper presents a simple model demonstrating the potential role payed by firm-specific human capital in supporting implicit labour contracts. Firm-specific human capital creates a relationship-specific surplus which not only provides a motivation for continuity of association, but also permits the firm to act as both creditor and insurer to the worker. The model highlights the point that, by facilitating commitment to long-term contracts, the creation of mobility costs for workers may in fact be welfare improving.

Keywords: LABOUR; CONTRACTS; HUMAN CAPITAL (search for similar items in EconPapers)
JEL-codes: J41 J6 (search for similar items in EconPapers)
Pages: 20 pages
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:618

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