De Paola, Maria and Scoppa, Vincenzo (2005): The Role of Family Ties in the Labour Market. An Interpretation Based on Efficiency Wage Theory.
Download (109kB) | Preview
By casual empiricism, it seems that many firms take explicit account of the family ties connecting workers, often hiring individuals belonging to the same family or passing jobs on from parents to their children. This paper makes an attempt to explain this behaviour by introducing the assumption of altruism within the family and supposing that agents maximise a family utility function rather than an individual one. This hypothesis has been almost ignored in the analysis of the relationship between employers and employees. The implications of this assumption in the efficiency wage models are explored: by employing members of the same family, firms can use a (credible) harsher threat¬ – involving all the family’s members in case of one member’s shirking - that allows them to pay a lower efficiency wage. On the other hand, workers who accept this agreement exchange a reduction in wage with an increase in their probability of being employed: this can be optimal in situation of high unemployment. Moreover, the link between parents and children allows the firm to follow a strategy that solves the problem of an individual’s finite time horizon through family’s reputation.
|Item Type:||MPRA Paper|
|Original Title:||The Role of Family Ties in the Labour Market. An Interpretation Based on Efficiency Wage Theory|
|Subjects:||J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts
D - Microeconomics > D6 - Welfare Economics > D64 - Altruism ; Philanthropy
M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M12 - Personnel Management ; Executives; Executive Compensation
|Depositing User:||VINCENZO SCOPPA|
|Date Deposited:||06. Jun 2008 06:58|
|Last Modified:||24. Feb 2015 08:44|
ALESINA, A., DANNINGER, and ROSTAGNO, M. (1999), "Redistribution Through Public Employment: The Case of Italy", NBER Working Paper No. 7387, October. AKERLOF, G. (1982), “Labour Contracts as a Partial Gift Exchange”, Quarterly Journal of Economics, vol. 97, n.4, pp. 543-69. AKERLOF, G. (1984), “Gift Exchange and Efficiency-Wage Theory: Four Views”, American Economic Review, vol. 74, n.2, pp. 79-83. AKERLOF, G. and YELLEN, J., (1988), “Fairness and Unemployment”, American Economic Review, vol. 78, n.2, pp. 44-49. AKERLOF, G. and YELLEN, J. (1990), “The Fair Wage-Effort Hypothesis and Unemployment”, Quarterly Journal of Economics, vol. 105, n. 2, pp. 255-83. ARNOTT R and STIGLITZ, J. (1991), “Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?”, American Economic Review, vol. 81, n. 1, 1991, pp. 179-90. BARCA, F. (1994), Imprese in cerca di padrone, Laterza, Roma. BARRO, R. (1974), “Are Government Bonds Net Wealth?”, Journal of Political Economy, vol. 82, n. 6, pp. 1095-1117. BECKER, G. (1974), “A Theory of Social Interactions", Journal of Political Economy, 82, 1063-1094. BECKER G. (1981), A Treatise on the Family, Harvard University Press, Mass. BECKER, G. (1965) “A Theory of the Allocation of Time”, Economic Journal, 75, pp. 493-517. BECKER G. (1995), “Family Economics and Macrobehavior”, in R. Febrero and P. Schwartz (ed.), The essence of Becker,. Stanford: Hoover Institution Press, 1995. BECKER, G. (1996), “Altruism in the Family and Selfishness in the Market Place”, ed. The economics of the family. Elgar Reference Collection. International Library of Critical Writings in Economics, vol. 64. Cheltenham, U.K.: Elgar; distributed by Ashgate, Brookfield, Vt., 1996, pp. 97-111. BECKER, G., 1998, L'approccio economico al comportamento umano, Bologna, Il Mulino. BENTOLILA, S. and ICHINO, A., 1999, “Unemployment and consumption: Are job losses less painful near the Mediterranean”, CEPR conference. BEN PORATH, Y. , 1980, “The F-Connection: Families, Friends and Firms and the Organization of Exchange”, Population and Development Review, vol. 6, n. 1, pp. 1-30. BERGSTROM, T., 1995, “A Fresh Look at the Rotten Kid Theorem and Other Household Mysteries”, University of Michigan, mimeo. BESLEY, T. and COATE S. (1995), “Group Lending, Repayment Incentives and Social Collaterals”, Journal of Development Economics, vol. 46, n.1, pp. 1-18. CIGNO, A., 1991, The Economics of the Family, Oxford University Press. DE PAOLA, M. e SCOPPA, V., "Family ties and training provision in an insider-outsider framework, Journal of Socio-Economics, 2001. DE ROSE S. e FLORIANI C. (1999), Imprenditori in Calabria, Rubbettino Editore, Soveria Manelli. DRAZEN A. AND GOTTFRIES N. (1994), “Seniority Rules and the Persistence of Unemployement”, Oxford Economic Papers, vol. 46, pp. 228-244. FABBRI, F. e ROSSI, N. (1997), “Caste, non classi” in Rossi, N. (1997) (a cura di), “L’istruzione in Italia: solo un pezzo di carta?”, Il Mulino, Bologna. FLORIANI S. (1988), “L’imprenditoria manifatturiera calabrese: risorse e vincoli strutturali e socioculturali”, in Fantozzi, P. (a cura di), Microcapitalismo, Rubbettino Editore, Soveria Manelli. FREY B. (1997), Not just for the money: An economic theory of personal motivation, Cheltenham, U.K. and Lyme, N.H. Elgar GREGG P. AND WADSWORTH J. (1994), “How Effective are State Employment Agencies? Job Centre Use and Job Matching in Britain”, National Institute for Economic and Social Research, Discussion Paper n.69 GREIF, A., 1993, “Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition”, American Economic Review, 83, 525-548. HOLZER, H., “Search Method Use by Unemployed Youth”, Journal of Labor Economics, 6(1), January 1988, pages 1-20. LABAND, D. and LENTZ, B., (1985), The Roots of Success: Why Children Follow in Their Parents' Occupational Footsteps, New York, Praeger. LA FERRARA, E., (1999), “Ethnicity and Reciprocity: A Model of Credit Transactions in Ghana”, Working Paper IGIER. LINDBECK A. E SNOWER D. J. (1988), The Insider-Outsider Theory of Employment and Unemployment, M.I.T. Press. MARSHACK, RADNER, 1972, Economic Theory of Teams, New Haven, Yale University Press. MONTGOMERY J. D. (1991), “Social Networks and Labour Market Outcomes: Toward an Economic Analisys”, American Economic Review, vol. 81, pp. 1408-18. PISTAFERRI, L. (1999), “Informal Networks in the Italian Labor Market", Giornale degli Economisti e Annali di Economia, vol. 58, n. 3-4, Dicembre, pp. 355-75. ROSSETTI, S. and TANDA, P., “Human Capital, Wages and Family Interactions”, Labour; 14(1), March 2000, pp. 5-34. ROTEMBERG, J., “Human Relations in the Workplace”, Journal of Political Economy, 102(4), August 1994, pages 684-717. SELTEN, R., (1978), “The Chain-Store Paradox”, Theory and Decision, 9, pp.127-159. SHAPIRO, C. E STIGLITZ, J., 1984, “Equilibrium Unemployment as a Worker Discipline Device”, American Economic Review, pp. 433-444. SOLOW, R. (1990), The Labour Market as a Social Institution, Basil Blackwell. SPAGNOLO, G., (1999), “Social Relations and Cooperation in Organizations”, Journal of Economic Behavior and Organization, 1, pp. 1-25. STIGLITZ, J. (1990), “Peer Monitoring and Credit Markets”, World Bank Economic Review, vol. 4, n. 3, pp. 351-66. VARIAN, H. (1990), “Monitoring Agents with Other Agents”, Journal of Institutional and Theoretical Economics, vol. 146, n.1, pp. 153-74.