Credit, Incentives and Reputation: A Hedonic Analysis of Contractual Wage Profiles

JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 6, December 1996

Posted: 13 Nov 1996

See all articles by Loren Brandt

Loren Brandt

University of Toronto - Department of Economics; IZA Institute of Labor Economics

Arthur J. Hosios

University of Toronto - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

A hedonic analysis of principal-agent employment contracts is developed in which workers and employers exchange labor services and contractual payment patterns and is applied to contract data from a household-level survey in rural China in 1935. The results indicate that credit market constraints motivated workers' and employers' contract choices, that shirking by workers rather than by employers was the dominant incentive issue, that reputational concerns rather than threats of termination were the key worker-disciplining device, and, finally, that a contract's third party acted as an enforcement device rather than as a matchmaker.

JEL Classification: C72, C78, J41

Suggested Citation

Brandt, Loren and Hosios, Arthur J., Credit, Incentives and Reputation: A Hedonic Analysis of Contractual Wage Profiles. JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 6, December 1996, Available at SSRN: https://ssrn.com/abstract=3503

Loren Brandt

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-4442 (Phone)
416-978-6713 (Fax)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Arthur J. Hosios (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-8997 (Phone)
416-978-6713 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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