Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment

W. Bentley Macleod and James Malcomson

Working Paper from Economics Department, Queen's University

Abstract: This paper characterizes all outcomes supportable by implicit employment contracts of the most general form when employee's performance is not public information. A strictly positive economic surplus must result from employment, the form of contract depending on how this surplus is divided between firm and employee. In a general equilibrium formulation with more workers than job vacancies, the surplus goes to employed workers giving them strictly higher utility than unemployed workers who are, therefore, involuntarily unemployed. With more job vacancies than workers, the surplus goes to firms with workers, giving them strictly positive profit despite there being unfilled vacancies.

Pages: 49 pages
Date: 1986
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment (1989)
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:585

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 ().