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We propose a new theory for downsizing, based on strategic reasons, rather than technological ones. A crisis may lead to a decrease in the willingness to cooperate in an organization, and therefore to a bad equilibrium. A consensual downsizing episode may signal credibly that survivors are...
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We study the earning structure and the equilibrium assignment of workers to firms in a model in which workers have social preferences and skills are perfectly substitutable in production. We allow firms to offer long terms contracts and for frictions in the labour market in the form of mobility...
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