Staff Report 131

Back to Publication

A Note on Labor Contracts With Private Information and Household Production

Ed Nosal
Richard Rogerson
Randall Wright - Consultant

Published January 1, 1991

Abstract
A classic result in the theory of implicit contract models with asymmetric information is that “underemployment” results if and only if leisure is an inferior good. We introduce household production into the standard implicit contract model and show that we can have underemployment at the same time that leisure is a normal good.


Download Paper (PDF)

 
Latest

Narayana Kocherlakota