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Authority in employment contracts: a bilateral bargaining model

Manning, Alan (1991) Authority in employment contracts: a bilateral bargaining model. CEPDP, 21. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

This paper takes a model of the employment contract which is incomplete in the sense that the required effort level is not exactly specified when employment is agreed and in which each worker negotiates their own contract with their employer. Given the incompleteness of the employment contract, residual rights of control over labour need to be specified. This paper analyses the allocation of these residual rights of control. It is argued that equilibrium employment contracts will tend to give the employer residual rights of control over labour, if workers are potential substitutes and give workers residual rights of control if workers are complements. However, it may not be the case that the equilibrium contracts maximise the available social surplus; in this case there is an argument for government intervention to regulate the form of employment contracts.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 1991 Alan Manning
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 21
Date Deposited: 21 Aug 2008 16:35
URL: http://eprints.lse.ac.uk/21124/

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