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https://hdl.handle.net/2142/85671
Description
Title
Three Essays in Personnel Economics
Author(s)
Balan, David Jonathan
Issue Date
2000
Doctoral Committee Chair(s)
Lee Alston
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Labor
Language
eng
Abstract
"It is widely believed that the U.S. has entered a period of widespread corporate ""downsizing"" in which firms lay off workers---often well-educated workers with high tenure---to an extent far greater than in the past. Recent empirical studies have lent some support to this belief. I argue that this phenomenon can be understood in light of Lazear's theory. The fact that Lazear contracts are no longer being written with young workers has important implications for high tenure (overpaid) workers who are party to Lazear contracts. If firms are no longer writing Lazear contracts with young workers, then they need no longer be concerned with their reputations for trustworthiness and are free to renege on their obligations to high tenure workers by laying them off. I test for this reneging using a sample of high tenure workers from the Displaced Worker Supplement to the Current Population Survey. I find that in the early years of the sample, workers who are more likely to be party to Lazear contracts are less likely to be laid off. By the end of the sample this is no longer the case. This is consistent with the claim that in recent years firms have been reneging on their implicit contracts with high tenure workers."
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