Limited commitment models of the labour market

Research output: Working paperDiscussion paper


We present an overview of models of long-term self-enforcing labour con- tracts in which risk-sharing is the dominant motive for contractual solutions. A base model is developed which is sufficiently general to encompass the two-agent problem central to most of the literature, including variable hours. We consider two-sided limited commitment and look at its implications for aggregate labour market variables. We consider the implications for empirical testing and the available empirical evidence. We also consider the one-sided limited commitment problem for which there exists a considerable amount of empirical support.
Original languageEnglish
Publisher Keele University
Number of pages31
Publication statusPublished - 1 Jan 2007

Publication series

NameKeele economics research paper
ISSN (Print)1740-231X
ISSN (Electronic)1740-231X

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