Involuntary Unemployment and Implicit Contracts
Quarterly Journal of Economics
1983
This paper provides an explanation of involuntary umemployment arising as a consequence of asymmetric information between firms and workers. Involuntary unemployment is defined as a situation where ex post gains to trade exist. A model of labor contracts is developed where the allocations are not ex post optimal. It is shown that inferiority of leisure is a necessary and sufficient condition for the existence of involuntary unemployment.
- DOI
- 10.2307/1885376
- Volume
- 98
- Pages
- 107
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