Journal of Labor Economics Vol. 8 No. 4 1990
Multiperiod Wage Contracts and Productivity Profiles
Abstract
When creditors do not honor human capital as collateral, firms can mediate financially by offering workers long-term wage contracts. The optimal contract specifies a wage consisting of a spot general skill component plus a component equal to the expected time-averaged value of the worker's specific skills with a competitor. Variations in the smoothed specific component are due only to changes in expectations about the likelihood of quitting a competing firm. The theory also explains interindustry disparities in wage paths and statistical discrimination by firms.
- DOI
- 10.1086/298233
- Volume
- 8
- Issue
- 4
- Pages
- 529-563
- Language
- en
- Sources
- openalex crossref