This chapter reviews recent developments in the study of individual employment contracts. It discusses three reasons for an employer and an employee to have a contract: (i) to allocate risk in a way different from a spot market; (2) to enhance the efficiency of investment decisions by protecting...

This paper explores the implications of specific training for relational contracts. A standard result for sustaining a relational contract is that the parties must jointly receive a surplus over what they can get by separating. This has been interpreted as employees with relational contracts...

The implications for labor markets of contracts to avoid investments without wages increasing with tenure. With turnover costs, fixed but renegotiable wages can protect general investments by both firm and employee, and generate wage stickiness without adversely affecting employment. Employment...

This chapter reviews recent developments in the study of individual employment contracts. It discusses three reasons for an employer and an employee to have a contract: (1) to allocate risk in a way different from a spot market; (2) to enhance the efficiency of investment decisions by protecting...