Contract Enforceability and the (In)efficiency of Worker Turnover
Publication Type
Working Paper
Version
publishedVersion
Publication Date
8-2016
Abstract
This paper considers the efficiency properties of risk-neutral workers mobility decisions in an equilibrium model with search frictions, but no search externalities, and where matches are experience goods. It is shown that the efficiency of workers mobility decisions depends on the degree of enforceability of contracts: mobility decisions are efficient when contracts are enforceable, while there is too little mobility when contracts are self-enforcing. I also show that in the latter case a simple ring tax can reestablish efficiency, thereby increasing mobility.
Keywords
on-the-job search, bargaining, contracts
Discipline
Behavioral Economics | Labor Economics
Research Areas
Applied Microeconomics
First Page
1
Last Page
37
Citation
JACQUET, Nicolas Laurent.
Contract Enforceability and the (In)efficiency of Worker Turnover. (2016). 1-37.
Available at: https://ink.library.smu.edu.sg/soe_research/1690
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.