Contracts and the division of labor
By: Daron Acemoglu, Pol Antras, Elhanan Helpman.
Contributors: Antràs, Pol, 1975-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11356; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11356.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Division of labor.; Contracting out.
Description: "We present a tractable framework for the analysis of the relationship between contract incompleteness, technological complementarities and the division of labor.  In the model economy, a firm decides the division of labor and contracts with its worker-suppliers on a subset of activities they have to perform.  Worker-suppliers choose their investment levels in the remaining activities anticipating the ex post bargaining equilibrium.  We show that greater contract incompleteness reduces both the division of labor and the equilibrium level of productivity given the division of labor.  The impact of contract incompleteness is greater when the tasks performed by different workers are more complementary.  We also discuss the effect of imperfect credit markets on the division of labor and productivity, and study the choice between the employment relationship versus an organizational form relying on outside contracting.  Finally, we derive the implications of our framework for productivity differences and comparative advantage across countries"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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