Implicit Contracts and Dominant Shareholders

Traditional trade theory has focused on the allocation of resources between various sectors of the economy and how it changes in response to trade liberalization while maintaining the assumption of free mobility of resources across sectors within an economy. This simplifying assumption is at odds with empirical evidence which shows considerable frictions in the movement of resources between sectors, at least in the short to medium run. Workers who lose their jobs in the import competing sector may find it hard to find a job immediately in the export sector. This has given rise to a growing literature that incorporates frictions in the mobility of factors of production in general, and labor in particular, in trade models. This article surveys the literature on trade and unemployment where unemployment is caused by search frictions or wage rigidity of some kind such as minimum wage, efficiency wage, or implicit contracts. While the focus is on unemployment, any model studying the impact of trade on labor markets features wage effects, too, and a brief discussion of wage effects is also provided. Trade affects unemployment in these multi-sector models through two main channels: sectoral unemployment rates and intersectoral reallocation of resources. In newer trade models with heterogeneous firms, trade can change unemployment by affecting the allocation of resources within a sector. While the theoretical models in this literature identify various channels through which trade liberalization affects unemployment, many of these channels have opposing implications for unemployment, rendering the net effect of trade liberalization on unemployment ambiguous in many settings. This has also given rise to an empirical literature studying the implications of trade liberalization on unemployment.

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Flexible Contracting? Economic Cultures and Implicit Contracts in Social Care

Journal of Social Policy ◽

10.1017/s0047279400005845 ◽

2000 ◽

Vol 29 (1) ◽

pp. 1-19 ◽

Cited By ~ 15

Author(s):

MAUREEN MACKINTOSH

Keyword(s):

Case Studies ◽

Social Care ◽

Local Authority ◽

Discursive Construction ◽

Risk Averse ◽

Implicit Contracts ◽

Non Profit ◽

Care Industry ◽

Economic Culture ◽

And Control

Drawing on case studies from two local authorities, this article identifies two distinct economic cultures in social care contracting. An arms-length contracting culture was emerging in interaction with risk-averse commercial suppliers, while a ‘partnership’ contracting culture was developing in association with non-profit providers who actively sought risk and responsibility. The article explores the discursive construction of the distinct implicit contracts associated with the two economic cultures, showing that ‘flexibility’ had become a key trope in contracting debate, carrying complex meanings of both responsiveness and control. The article thus unpacks the notion of ‘soft’ contracting in social care, and argues that social care contracting should be understood as a process of mutual shaping of both a divided care industry and an internally divided local authority economic culture. The article then draws out a series of implications of the research for policy and regulation in care contracting.

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Implicit Contracts Under Asymmetric Information

The Quarterly Journal of Economics ◽

10.2307/1885377 ◽

1983 ◽

Vol 98 ◽

pp. 123 ◽

Cited By ~ 85

Author(s):

Sanford J. Grossman ◽

Oliver D. Hart

Keyword(s):

Asymmetric Information ◽

Implicit Contracts

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