The need to give incentives is usually absent in the literature on minimum wages. However, especially in the service sector it is important how well a job is done, and employees must be incentivized to perform accordingly. Furthermore, many aspects regarding service quality cannot be verified,...

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...

This paper explores the optimal provision of dynamic incentives for employees with reciprocal preferences. Building on the presumption that a relational contract can establish a norm of reciprocity, I show that generous upfront wages that activate an employee’s reciprocal preferences are more...

This paper shows that the cost of enforcing contracts governing non-financial relationships between firms affects a firm's financing structure. We analyze the interaction between a firm's capital structure and the type of contracts it uses to deal with its suppliers. We first develop a...

The need to give incentives is usually absent in the literature on minimum wages. However, especially in the service sector it is important how well a job is done, and employees must be incentivized to perform accordingly. Furthermore, many aspects regarding service quality cannot be verified,...

This paper shows that the cost of enforcing contracts governing non-financial relationships between firms affects a firm's financing structure. We analyze the interaction between a firm's capital structure and the type of contracts it uses to deal with its suppliers. We first develop a...

This paper shows that the cost of enforcing contracts governing non-financial relationships between firms affects a firm's financing structure. We analyze the interaction between a firm's capital structure and the type of contracts it uses to deal with its suppliers. We first develop a...