No. 105: When Should a Firm Employ its Workers? A Relational Contracting Approach

Jahr: 2022

Typ: Working Paper

Open Science:

Self-contained

Abstract

A principal hiring an agent chooses between employment and self-employment. Under employment, the principal can control the manner in which the agent performs the assignment (the ‘work design’), whereas this is legally forbidden under self-employment. Due to incomplete contracts, the relationship is governed by relational agreements, which are influenced by the allocation of control. We show that employment typically results in an over-demanding work design, compared to an under-demanding work design under self-employment, and that employment relationships are more rigid and better suited to favorable production environments. We further examine the impact of taxation, minimum wages, and formal performance pay.

Veröffentlichungsinformationen

TRR 266 researchers

Anja Schöttner Humboldt University of Berlin

Anja Schöttner is Professor for Management at Humboldt University of Berlin. Her research focus is on personnel economics and organizational economics. Her work is published in leading peer-reviewed journals such as the Management Science, the Journal of Economic Behavior & Organization and the European Economic Review. In addition, she is member of the editorial board of the Journal of Business Economics.

Harvey Upton, Humboldt University of Berlin

DOI

DOI Link

To cite this article

Schöttner, A., & Upton, H. (2022). When Should a Firm Employ its Workers? A Relational Contracting Approach. TRR 266 Accounting for Transparency Working Paper Series No. 105. https://doi.org/10.2139/ssrn.4257746

Zugehörige Projekte

A02

Transparency Effects of Organizational Innovations

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Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der Goethe-Universität Frankfurt, der Universität zu Köln, der Leibniz Universität Hannover und der TU Darmstadt, die die gleiche Forschungsagenda verfolgen.