Principal-agent models take outside options, determining participation and incentive constraints, as given. We construct a general equilibrium model where workers' reservation wages and the maximum punishment acceptable before workers quit are instead determined endogenously. We simultaneously...

This paper uses a new data set of 3,954 US CEO employment agreements to study their contractual time horizon. Longer contracts offer protection against dismissals: turnover probability increases by 12% each year closer to expiration. This should encourage CEOs to pursue long-term projects, and...

We analyze whether a principals decision to layoff an agent affects the performance of the surviving agents. To study the impact of the decision in isolation, we conducted an experimental principal-agent game. We find that agents reduce their performance by 37% as a response to the decision....

Non-renewable fixed-term and agency work contracts are becoming more used instead of the traditional Russian model of open-ended employment. The authors examine the influence of institutional and organizational factors on the use of two forms of non-standard work contracts in Russia with data...

Many firms adjust employment in a "lumpy" manner -- infrequently and in large bursts. In this paper, I show that lumpy adjustments can arise from concerns about the incentives of remaining workers. Specifically, I develop a model in which a firm's productivity depends on its workers' effort and...

I estimate a dynamic agency model to quantify the importance of dismissals in CEO incentives -vis-à-vis pecuniary compensation. The model features endogenous dynamics in deferred and flow compensation, as well as exogenous departures, and endogenous dismissals after poor firm performance. Thus,...

This paper incorporates a risk-neutral principal-agent model with contractual constraints into a random search model to study the interaction between contracting and search in partial and general equilibrium. I introduce heterogeneity in principals' and agents' production technologies in terms...

We present a modified principal-agent model to identify a link between the anticipated likelihood of future CEO turnover and the optimal sensitivity of incentive pay to firm performance. The analysis focuses on the optimal sequence of standard one-period incentive contracts when CEO effort...