Reputation Cycles and Earnings Dynamics

51 Pages Posted: 12 Nov 2018

See all articles by Boyan Jovanovic

Boyan Jovanovic

New York University - Department of Economics

Julien Prat

University of Vienna; IZA Institute of Labor Economics

Date Written: November 2018

Abstract

Cyclical patterns in earnings can arise when contracts between firms and their workers are incomplete, and when workers cannot borrow or lend so as to smooth their consumption. Earnings cycles generate occasional large changes in earnings, consistent with some recent empirical findings. At the calibrated parameter values, financial constraints promote investment in reputation – an intangible capital form – in contrast to their documented inhibiting effect on investment in tangible capital.

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Suggested Citation

Jovanovic, Boyan and Prat, Julien, Reputation Cycles and Earnings Dynamics (November 2018). NBER Working Paper No. w25252, Available at SSRN: https://ssrn.com/abstract=3282952

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

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New York, NY 10012
United States

Julien Prat

University of Vienna ( email )

Bruenner Strasse 72
Vienna 1210, Vienna
Austria

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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