HUMAN CAPITAL AND SELF-ENFORCING CONTRACTS

This essay analyzes labor contracts as a device for rearranging factor incomes over time when the lack of verifiable public information about future compensation prevents finitely-lived workers from borrowing against their earnings. Specific human capital is used as an incentive to implement intertemporal self-enforcing contracts between workers and firms. I propose a necessary and sufficient condition for the existence of such contracts, explore the resulting equilibrium earnings profiles, and investigate how imperfections in the credit market influence the way workers allocate time between current production and training.


Issue Date:
May 05 1987
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/268330
Language:
English
Total Pages:
47
JEL Codes:
022; 821




 Record created 2018-02-14, last modified 2018-02-14

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