Abstract
An implicit contract is a theoretical construct meant to describe complex agreements, written and tacit, between employers and employees, which govern the exchange of labour services when various types of job-specific investments inhibit labour mobility and opportunities to shed risk are limited by imperfectly developed markets for contingent claims. This construct differs from the more familiar one of a neoclassical labour exchange in emphasizing a trading process, frequently over a long period of time, between two specific economic units (say a worker and a firm, union and management, and so on) rather than the impersonal, and often instantaneous, market process in which wages decentralize and coordinate the actions of labour suppliers and labour demanders.
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Azariadis, C. (2018). Implicit Contracts. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1180
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1180
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