Abstract
The inability of employers to monitor perfectly the level of effort of their employees is a potentially serious impediment to labor market efficacy. Indeed, a number of recent studies have concluded that this may lead to involuntary unemployment (Shapiro and Stiglitz [1984], Sparks [1986]); an inefficient sectoral allocation of workers (Oi [1990], Strand [1986]); and discrimination against productively identical workers (Bulow and Summers [1986]). This paper shows that the lock‐in effect of firm‐specific human capital can help alleviate problems of worker moral hazard and thereby promote labor market performance.
Original language | English (US) |
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Pages (from-to) | 128-137 |
Number of pages | 10 |
Journal | Economic Inquiry |
Volume | 32 |
Issue number | 1 |
DOIs | |
State | Published - Jan 1994 |
Externally published | Yes |
ASJC Scopus subject areas
- General Business, Management and Accounting
- Economics and Econometrics