Labour Turnover, Wage Structures and Moral Hazard
Richard Arnott and
Joseph Stiglitz
Working Paper from Economics Department, Queen's University
Abstract:
A multi-period, general equilibrium labour market model is developed where risk-averse workers face job-related uncertainty and labour turnover is costly. If a worker is unlucky and suffers a bad match, he quits and joins another firm. We assume that the quality of a job match is unobservable; as a results insurance markets are incomplete. Also the firm is assumed to provide implicit insurance against job dissatisfaction. Typically this is done by paying workers more than their marginal product in early years with the firm and less thereafter. Since the probabilities of quit rates are affected by the amount of insurance provided, this implicit insurance is characterized by moral hazard. We show this gives rise to inefficiency.
Pages: 44
Date: 1982
References: Add references at CitEc
Citations:
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:496
Access Statistics for this paper
More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock ().