Research

Contracting in Dangerous Professions: Worker's safety and the role of firm specific productivity shocks

This paper examines contracting problems that arise when effort boosts current production but increases the risk of losing the ability to work in the future. In a competitive and symmetric environment, agents with high perceived ability are more likely to receive long-term contracts. However, when firms face temporary productivity shocks, the threshold for offering long-term contracts decreases, regardless of the overall state of the world. This paper extends the Career Concerns literature by incorporating human capital deterioration and exploring how different contracting environments influence outcomes. The framework offers insight into contracting dynamics in high-risk professions, such as those with significant injury risk—including Major League Baseball.

Hiding Your Advantage: Private Firm Tied Productivity Shocks Contracting in a Career Concerns Setting

Train or Perform: Discovering the Optimal Career Path for an Agent given Different Firm Structures