Contract-Theoretic Approaches to Wages and Displacement
29 Pages Posted: 22 Jun 1999 Last revised: 22 Jul 2022
Date Written: February 1999
Abstract
This paper develops a theoretical framework for analyzing contracting imperfections in long-term employment relationships. We focus chiefly on limited enforceability and limited worker liquidity. Inefficient severance of employment relationships, payment of efficiency wages, the relative response of wages and employment to business cycle shocks, and the propagation of these shocks are linked to the nature of contracting imperfections.
Suggested Citation: Suggested Citation
Den Haan, Wouter J. and Ramey, Garey and Watson, Joel, Contract-Theoretic Approaches to Wages and Displacement (February 1999). NBER Working Paper No. w6972, Available at SSRN: https://ssrn.com/abstract=151633
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