In this paper, we argue that important labor market phenomena can be better understood if one takes (i) the inherent incompleteness and relational nature of most employment contracts and (ii) the existence of reference-dependent fairness concerns among a substantial share of the population into...

Following the adoption of information and communication technologies (ICT), firms are likely to face increasing skill requirements. They may react either by training or hiring the new skills, or by a combination of both. We first show that ICT are indeed skill biased and we then assess the...

Executive search firms play a major role in the hiring decisions of executives, yet their impact on executive pay and firms' internal labor markets remain unexplored. In this paper, we present a model that attempts to fill this gap. The model relates the escalation of CEO pay to a decline in...

We find that the directorial labor market's ability to align the incentives of managers and shareholders depends on the aggregate level of investor protection in a country. If a country's corporate governance environment is strong and boards are likely to protect the interest of shareholders, a...