Limited Commitment Models of the Labor Market

24 Pages Posted: 5 Nov 2007

See all articles by Jonathan P. Thomas

Jonathan P. Thomas

affiliation not provided to SSRN

Tim S. Worrall

University of Edinburgh

Date Written: 2007-08-01

Abstract

We present an overview of models of long-term self-enforcing labor contracts in which risk-sharing is the dominant motive for contractual solutions. A base model is developed that is sufficiently general to encompass the two-agent problem central to most of the literature, including variable hours. We consider two-sided limited commitment and look at its implications for aggregate labor market variables. We consider the implications for empirical testing and the available empirical evidence. We also consider the one-sided limited commitment problem for which there exists a considerable amount of empirical support.

Suggested Citation

Thomas, Jonathan P. and Worrall, Tim S., Limited Commitment Models of the Labor Market (2007-08-01). Scottish Journal of Political Economy, Vol. 54, Issue 5, pp. 750-773, November 2007, Available at SSRN: https://ssrn.com/abstract=1026472 or http://dx.doi.org/10.1111/j.1467-9485.2007.00440.x

Jonathan P. Thomas (Contact Author)

affiliation not provided to SSRN

No Address Available

Tim S. Worrall

University of Edinburgh ( email )

30 Buccleuch Place
Edinburgh, Scotland EH8 9JY
United Kingdom
(0)131 651 5128 (Phone)

HOME PAGE: http://www.timworrall.com

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