Working Paper: NBER ID: w28052
Authors: Boyan Jovanovic; Julien Prat
Abstract: Cyclical patterns in earnings can arise when contracts between firms and their workers are incomplete, and when workers cannot borrow or lend so as to smooth their consumption. Effort cycles generate occasional large changes in earnings. These large changes are transitory, consistent with recent empirical findings.
Keywords: No keywords provided
JEL Codes: E24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low effort (D29) | low current consumption (E21) |
| low current consumption (E21) | decreased discount factor (D15) |
| decreased discount factor (D15) | diminished incentive to maintain good reputation (D82) |
| diminished incentive to maintain good reputation (D82) | low reputational investment (G24) |
| high effort (D29) | high current consumption (E21) |
| high current consumption (E21) | higher discount factor (H43) |
| higher discount factor (H43) | reinforced incentive to maintain good reputation (L14) |
| reinforced incentive to maintain good reputation (L14) | high reputational investment (G24) |
| current consumption dynamics (E21) | effort and reputation (D29) |
| increased reputational concerns (M14) | greater income volatility (E25) |
| effort and output correlation (D29) | income volatility (D31) |