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 , Sparks ); an inefficient sectoral allocation of workers (Oi , Strand ); and discrimination against productively identical workers (Bulow and Summers ). 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)|
|Number of pages||10|
|State||Published - 1994|
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Economics and Econometrics