This paper provides a complete characterization of the welfare economics of employment contracts when workers are immobile in the ex post period. Necessary and sufficient conditions for constrained Pareto optimality are derived for economies with incomplete risk markets, two consumption goods and random production technologies in which: (a) workers can/cannot observe realizations of their employers ' revenue function (symmetric vs. asymmetric information), and in which; (b) employment contracts allow/preclude contingent wages and/or employment levels (flexible vs. rigid contracts). This taxonomic approach serves to identify the welfare implications of exogenous and endogenous contractual rigidities, and to isolate a class of externalities that is unique to economies with asymmetric information. The latter market failure is also present with "indexed " contracts when workers alone can observe realizations of their consumption goods prices (another form of asymmetric information). 1.

We study a simple model of the determination of the level of employment in which a capitalist decides how many workers to hire, and then bargains over the wage with those whom he hires. If the capitalist hires all the available workers, his position is weak since, in the event of a strike, he is unable to hire strike-breakers; for this reason he chooses to leave some workers ("involuntarily") unemployed. An increase in unemployment benefits which raises the cost of hiring strike-breakers affects the bargaining power of both capitalist and workers; under some conditions it leads to a reduction in unemployment. 1.

This paper presents new identifiability conditions for the Cox proportional hazard model for duration data when unobserved person specific variables are present. We compare our conditions with those presented by Elbers and Ridder. We also present identifiability conditions for a rich class of parametric hazard models without regressor variables.

This paper presents an experimental study of a computerized “posted-offer” pricing mechanism that captures many of the basic institutional features of retail exchange in the U.S. Posted-offer market performance is evaluated relative to “double-auction” market performance using two supply and demand designs. Subject experience with the trading mechanism is explicitly considered as an experimental treatment variable. The market data suggest that prices tend to be higher and efficiency lower under posted-offer pricing relative to double auction. However, the institutional effect appears to interact with other design conditions. When feasible, the predictive power of competitive, Nash, and limit-price theoretic equilibria are empirically evaluated.