COMPETITION AND RELATIONAL CONTRACTS: THE ROLE OF UNEMPLOYMENT AS A DISCIPLINARY DEVICE

Abstract When workers are faced with the threat of unemployment, their relationship with a particular firm becomes valuable. As a result, a worker may comply with the terms of a relational contract that demands high effort even when performance is not enforceable by a third party. But can relational contracts motivate high effort when workers can easily find alternative jobs? We examine how competition for labor affects the emergence of relational contracts and their effectiveness in overcoming moral hazard in the labor market. We show that effective relational contracts do emerge in a market with excess demand for labor. Long‐term relationships turn out to be less frequent when there is excess demand for labor than they are in a market characterized by exogenous unemployment. However, stronger competition for labor does not impair labor market efficiency: higher wages induced by competition lead to higher effort out of concerns for reciprocity.     

The Wealth of Nations and the Happiness of Nations: Why “Accounting” Matters

We review income-happiness research in light of competing theoretical frameworks, unit of analysis, and methodological issues. Within-countries, absolute income is weakly related to happiness, comparison effects depend on the measure utilized, and income change and perceived income produce inconsistent findings. Across countries, absolute income is a stronger predictor of happiness, different comparison effects are significant, income change results are predominantly positive, and the financial-life satisfaction relationship is more robust.     

Confronting internalized oppression in sex therapy with lesbians

This paper focuses on a much-neglected aspect of therapy with lesbian clients: treatment of sexual dysfunction. It examines roots of dysfunction that can be found in cultural homophobia and misogyny, and presents a theoretical framework for intervention in the sexual problems of lesbian clients.     

Index of Authors Volume 64, 2003

Social Indicators Research -     

Fertility transition in a rural,Catholic population: Bavaria, 1880-1910

The decline of human fertility that occurred in Europe and North America in the nineteenth century, and elsewhere in the twentieth, remains a topic of debate largely because there is no accepted explanation for the event. This paper uses district-level data from Bavaria to study the correlates of the decline of fertility in that German kingdom in the nineteenth century. Bavaria's fertility transition was later and less dramatic than in other parts of Germany. Our results for Bavaria indicate that the European Fertility Project was right about the role of religion and secularization, but missed an important role for the economic and structural effects stressed by economic historians.     

THE BANK OF CANADA AS A DETERMINANT OF HEALTH

The Bank of Canada may be one of the most important determinants of health within the reach of government policy. Throughout its last three governorships, the Bank has pursued a staunchly anti-inflationary policy. Near zero percent inflation has helped to maintain unemployment levels above all but one of Canada's partners in the Group of Seven nations. Although debate continues, the bulk of the published literature supports a strong relationship between unemployment and ill health. Unfortunately, recent Governors have promulgated a mandate for the Bank that ignores its original mandate in the Bank of Canada Act, its influence on unemployment, and the human cost of sickness and premature death associated with unemployment. Federal monetary policy must take into account this human cost. Otherwise the myopic focus on a healthy economy in the short-run will compromise the goal of a healthy country in the long-run.