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Fluctuations and Rigidities in Local Labor Markets. Part 2: Reinterpreting Contracts

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  • G L Clark

    (John F Kennedy School of Government, Harvard University, Cambridge, MA 02138, USA)

Abstract

Local labor markets are characterized by rigidities in their patterns of adjustment to short-run fluctuations. With or without unions, fluctuations in employment, hours worked, and money wages are unlike the patterns predicted by conventional discrete-exchange labor-market theories. Moreover there are distinct geographical and industrial patterns in the observed rigidities. Neoclassical implicit contract theory has been vindicated. Or has it? Obvious empirical difficulties remain, especially with regard to predicting which adjustment variable has precedence. There are conceptual shortcomings as well, evidenced by ad hoc assumptions of cooperative wealth maximization. By integrating the underlying structure of inequality with the processes of production and exchange, principles of an alternative conceptualization of contract theory are sketched and their implications noted for a set of hypothetical local labor markets. Based upon these arguments a research agenda for analyzing the relational character of local labor markets is briefly outlined.

Suggested Citation

  • G L Clark, 1983. "Fluctuations and Rigidities in Local Labor Markets. Part 2: Reinterpreting Contracts," Environment and Planning A, , vol. 15(3), pages 365-377, March.
    • Handle: RePEc:sae:envira:v:15:y:1983:i:3:p:365-377
    DOI: 10.1068/a150365
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    References listed on IDEAS

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    1. Hall, Robert E & Lilien, David M, 1979. "Efficient Wage Bargains under Uncertain Supply and Demand," American Economic Review, American Economic Association, vol. 69(5), pages 868-879, December.
    2. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
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    3. Lindsay N. Amiel & Steven Deller & Judith I. Stallman, 2012. "Economic Growth and Tax and Expenditure Limitations," The Review of Regional Studies, Southern Regional Science Association, vol. 42(3), pages 185-206, Winter.

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