Work Incentives and the Demand for Primary and Contingent Labor

34 Pages Posted: 1 Jan 2002 Last revised: 12 Mar 2010

See all articles by James B. Rebitzer

James B. Rebitzer

Boston University School of Management; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Bard College - The Levy Economics Institute

Lowell J. Taylor

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Date Written: March 1991

Abstract

This paper presents an incentive-based dual labor market model. Three implications of the model are emphasized. First, in equilibrium, there is an excess supply of workers to primary jobs. Second, when demand is uncertain, firms may choose a mix of primary and contingent workers to perform the same job, even when these workers are perfect substitutes in production. Third, firms prefer to hire into primary jobs workers with strong job attachment and workers whose preferences lead them to prefer long work hours. We argue that industries with high proportions of part-time workers will tend to have large concentrations of contingent workers. The empirical finding that the wages and benefits of full-time workers are significantly reduced in industries with large concentrations of part-time workers appears consistent with this hypothesis.

Suggested Citation

Rebitzer, James B. and Taylor, Lowell J., Work Incentives and the Demand for Primary and Contingent Labor (March 1991). NBER Working Paper No. w3647. Available at SSRN: https://ssrn.com/abstract=227432

James B. Rebitzer (Contact Author)

Boston University School of Management ( email )

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Bard College - The Levy Economics Institute

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Lowell J. Taylor

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States
412-268-3278 (Phone)
412-268-7036 (Fax)

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