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 the return on investments made by one party from being captured by the other; and (3) to motivate the employee by making compensation depend on performance. The main emphasis is on issues that arise f...Expand abstract
- Discussion Paper Series In Economics And Econometrics
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Individual Employment Contracts.
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