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Coercion, Obnoxious Tasks, and Economic Efficiency

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Listed:
  • Soham Baksi
  • Pinaki Bose
  • Marc T. Law

Abstract

Incomplete contracts and inadequate enforcement of labor rights, together with the asymmetry of power between a worker and her employer, create an environment where the employer can forcibly extract additional services (e.g., unpaid overtime or sexual favors) from the worker beyond the mutually agreed terms of exchange. We show that coercive impositions can coexist with voluntary transactions in the labor market, and that a positive incidence of coercion can adversely affect the efficiency of the corresponding market transactions. This may justify banning the legal market for the additional service if it is regarded as obnoxious by society.

Suggested Citation

  • Soham Baksi & Pinaki Bose & Marc T. Law, 2021. "Coercion, Obnoxious Tasks, and Economic Efficiency," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 177(1), pages 120-134.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2020-0051
    DOI: 10.1628/jite-2020-0051
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    References listed on IDEAS

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    More about this item

    Keywords

    workplace; harassment; coercion; economic efficiency;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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