Working Paper: NBER ID: w1734
Authors: Russell Cooper
Abstract: This paper explores the positive and normative aspects of share contracts. In particular, the paper explores the properties of a share system as advanced by Martin Weitzman in The Share Economy.The model employed highlights a "macroeconomic externality" created in a multi-sector economy with imperfect competition. The introduction of share contracts is shown to influence the comparative static properties of the model economy and in some cases to lead to Pareto superior outcomes.
Keywords: share contracts; macroeconomic externality; labor market; employment fluctuations
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of share contracts (G10) | comparative static properties of the model economy (D50) |
| introduction of share contracts (G10) | Pareto superior outcomes (D69) |
| share economy (D16) | better absorb shocks without causing unemployment (J65) |
| share firms (D26) | reduced fluctuations in employment and output (E32) |
| share firms (D26) | absorb workers laid off by wage firms (J63) |
| share system (D16) | inherently recession-resistant (R33) |
| share system (D16) | mitigates adverse effects of unemployment (J65) |
| share economy (D16) | socially superior to wage economy (P19) |
| wage system (J33) | privately dominates share system (P31) |
| necessitating tax and transfer system (H29) | facilitate transition to share contracts (L14) |