Standard economic theory predicts that firms will not invest in general training and will underinvest in specific training. Empirical evidence indicates, however, that firms do invest in general training of their workers. Evidence from laboratory experiments points to less underinvestment in specific training than theory predicts. We propose a simple model in which a firm invests the socially o...

Mutual Monitoring in Teams: Theory and Experimental Evidence on the Importance of Reciprocity Monitoring by peers is often an effective means of attenuating incentive problems. Most explanations of the efficacy of mutual monitoring rely either on small group size or on a version of the Folk theorem with repeated interactions which requires reasonably accurate public information concerning the b...

We construct a general equilibrium model of firm formation in which organization is endogenous. Firms are coalitions of agents providing effort and investment capital. Effort is unobservable unless a fixed monitoring cost is paid, and borrowing is subject to a costly state verification problem. Because incentives vary with an agent's wealth, different types of agents become attractive firm memb...

It is well-documented that employers refuse to hire workers who offer their services at less than the prevailing wage. The received explanation is that workers are motivated by reciprocity they desire to reward kindness and punish hostility. To refuse an outsider’s under-bid is viewed as a kind choice that is met with good effort; a low wage is viewed as an insult that is met with shirking. We...

We consider a model of occupational choice in large economies where individuals differ in their wealth endowment. Individuals can remain self-employed or engage in productive matches with another individual, i.e., form firms. Matches are subject to a moral hazard problem with limited liability. The division of the gains from such matches is determined by competitive forces. When the incentive p...

The Insider-Outsider Theory: A Survey This article is an idiosyncratic survey of the insider-outsider theory, describing the vision underlying the theory, and evaluating salient contributions to the literature in the light of this vision. We also indicate what appear to have been dead-ends and red herrings in past research. The first section deals with the theory, concerning how labor turnover ...

Flexibility vs. Rigidity: Does Spain have the worst of both Worlds? In this paper we study the structure of labor market flows in Spain and compare them with France and the US. We characterize a number of empirical regularities and stylized facts. One striking result is that the job finding rate is slightly higher than in France, while the jon loss rate is much higher, putting Spain half-way be...

the main aim goal of this paper is estimating time series of social capital in iran. for this aim, first we have reviewed theoretical and empirical literature of social capital, and then we used fuzzy method for estimating time series of social capital. we used latent variable, because social capital is a qualify variable. crime and participation indexes are two related variables with social ca...

Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and volunteers belonging to public, private forprofit and private nonprofit institutions delivering social services in Italy. The analysis aims to estimate the determinants of wages across organisations at ...