Status considerations with respect to consumption give rise to negative externalities because individuals do not take into account that their decisions affect the relative consumption position of others. Further, status concerns create incentives for excessive labour supply in competitive...

Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to...

This paper studies how social relationships between managers and employees affect relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The contract may contain two types of...

We develop a model of manager-employee relationships where employees care more for their manager when they are more convinced that their manager cares for them. Managers can signal their altruistic feelings towards their employees in two ways: by offering a generous wage and by giving attention....

The current unemployment insurance and employment protection legislation were set up in an environment in which relationships between workers and firms were typically long-lasting and stable. The increasing globalisation of the economy and the rapid technological and organisational changes...

We construct a political equilibrium in which employers and labour unions bargain over labour contracts, wage-earners and profit-earners lobby the government for taxation and labour market regulation, and labour market legislation must be accepted by the majority of voters. We show that the...

There exist many indicators for corporatism. Using a latent variables approach, we extract common aspects in 29 corporatism indicators which have been suggested in the literature and find two factors that can be identified as the degree of coordination between employers and trade unions, and the...

Using cross-country data, this paper investigates the relationship between workplace representation and strikes. Works councils are associated with reduced strike activity. However, where union members make up a majority of works councillors, such union-dominated councils experience greater...

This paper explores the relationship between trust and establishment performance. The outcome indicators are management's assessment of the economic or financial situation of the workplace and its relative labor productivity. Trust is initially measured using the individual survey respondent's...

This paper explores how a relational contract establishes a norm of reciprocity and how such a norm shapes the provision of informal incentives. Developing a model of a long-term employment relationship, I show that generous upfront wages that activate the norm of reciprocity are more important...