Conventional models predict that workers consider employment opportunities and monetary rewards expected over their lifetimes when making current period decisions such as whether to quit a job. This article tests the hypothesis that later career opportunities affect quit decisions by examining the relationship between teaching and school administration. Evidence on the extent to which administrative positions are available to teachers, and the salary premia associated with them, is presented. Discrete time logit-hazard models of teacher quits, estimated using data from New York State, provide some support for the hypothesis, though the magnitudes of the estimated effects are small.

This article considers the implications of allowing a manager discretion over task assignment. If employees earn rents from carrying out tasks, and the manager cannot "sell" the jobs to her subordinates, she has an incentive to take on more tasks than is optimal and delegate too few to a subordinate. I show that although firms can alleviate this incentive by offering output-contingent contracts, even with the optimal contract, (i) the manager carries out too many tasks, (ii) she exerts too much effort on her own tasks, and (iii) her subordinate exerts too little effort on his tasks.

This article characterizes labor markets in which the heterogeneity of workers and firms results in thin markets and rents. Neoclassical marginal analysis and matching are blended into a computable general equilibrium model of trade in efficiency units of labor. Although workers' bargaining problems are interrelated, a simple wage contract generates wage flexibility and efficient matching in the model's equilibrium. Equilibrium wages are predicted to vary with the diversity of firms, the scarcity of skills, and the costliness of search. The model is applied to superstar markets, union bargaining in sports, interindustry wage differentials, and the relationship between pay and profit.

One method of estimating losses resulting from work stoppages is to multiply the total number of man-days lost during disputes by the average product of workers. This statistic can be easily calculated using information typically available from government agencies but has obvious flaws. For example, the behavior of other firms not involved in disputes is ignored. Moreover, when output is durable, the impact on consumption is unknown since inventories can be used as buffers. To assess the importance of these and other considerations, I develop an alternative empirical framework and implement it using data from the British Columbian lumber industry.

An efficient matching model of quits and layoffs is developed to account for several empirical regularities. Differences between quits and layoffs over the life and business cycles and across demographic groups are generated by differential rates of general productivity growth. The standard approach to quits and layoffs, based on wage rigidity, is shown to be incapable of accounting for many of the empirical regularities. Although a formal test rejects a structural prediction of the efficient turnover model, the specification does well in predicting both the level of and time-series variation in the fraction of separations labeled quits.

This paper examines firms' problem of how to motivate risk-averse workers not to shirk when workers' utility functions are unknown. The problem is studied in a 2-period setting in which a worker's actions today can influence not only his compensation today but the firms' beliefs about his preferences. Firms cannot credibly commit to ignore the revealed information, so workers' actions today affect their future compensation contracts. It is shown that, in the Wilson/Miyazaki equilibrium, firms may pool workers and learn about their types gradually over time rather than inducing them to separate and reveal their types immediately.

Contract and search theories are integrated to provide a consistent explanation of contract formation, the intertemporal structure of labor markets, the absence of ex post market clearing, and thus of unemployment in a contractual setting. Self-fulfilling equilibria are described in which low-productivity firms lay off some workers, while high-productivity firms' recruitment (search) intensity and the resulting degree of interfirm mobility are endogenous. The effects of severance pay on layoffs and mobility are identified. Finally, the market economy is shown to generate too few layoffs whenever high-productivity firms recruit new hires: without recruitment, laidoff workers are immobile, and equilibrium is constrained efficient.

This paper describes the equilibrium wage distribution and unemployment rate when firms recruit (search for) employees. A model in which firms' inability to distinguish workers who refuse job offers increases their expected recruiting costs, is contrasted with one in which indistinguishable low-productivity workers decrease firms' expected gains from hiring. In both, work force heterogeneity enhances search uncertainty, firms recruit less intensively than otherwise, and so the equilibrium unemployment rate rises. Heterogeneity reflects searchers' incomplete knowledge of desirable trading partners' locations and will likely be a confounding influence and source of unemployment in large economies with imperfectly observable sector-specific shocks.