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American Economic Review: Vol. 102 No. 1 (February 2012)

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Contracts versus Salaries in Matching

Article Citation

Echenique, Federico. 2012. "Contracts versus Salaries in Matching." American Economic Review, 102(1): 594-601.

DOI: 10.1257/aer.102.1.594

Abstract

Firms and workers may sign complex contracts that govern many aspects of their interactions. I show that when firms regard contracts as substitutes, bargaining over contracts can be understood as bargaining only over wages. Substitutes is the assumption commonly used to guarantee the existence of stable matchings of workers and firms. (JEL C78, D86, J31, J41)

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Authors

Echenique, Federico (CA Institute of Technology)

JEL Classifications

C78: Bargaining Theory; Matching Theory
D86: Economics of Contract: Theory
J31: Wage Level and Structure; Wage Differentials
J41: Labor Contracts


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