Transactions Costs and the Employment Contract in the US Economy

45 Pages Posted: 6 Apr 2013

See all articles by W. Bentley MacLeod

W. Bentley MacLeod

Columbia University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Daniel Parent

McGill University - Department of Economics

Abstract

In this paper we adapt the model of MacLeod (2007) to provide one way to formally implement some of Williamson's ideas regarding the effect of transactions costs upon employment relationship. We then explore the empirical implications of this model with a data set that measures job characteristics using the Dictionary of Occupational Titles (DOT), and merge this data set with the Panel Study on Income Dynamics (PSID). We find that viewing the data through the lens of transactions costs economics provide a useful way to organize the data on compensation in the US labor market.

Keywords: compensation, transactions costs, labor markets

JEL Classification: J33

Suggested Citation

MacLeod, William Bentley and Parent, Daniel, Transactions Costs and the Employment Contract in the US Economy. IZA Discussion Paper No. 7306. Available at SSRN: https://ssrn.com/abstract=2245976

William Bentley MacLeod (Contact Author)

Columbia University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics ( email )

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Daniel Parent

McGill University - Department of Economics ( email )

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