The Economics of Labor Coercion
2011; Wiley; Volume: 79; Issue: 2 Linguagem: Inglês
10.3982/ecta8963
ISSN1468-0262
AutoresDaron Acemoğlu, Alexander Wolitzky,
Tópico(s)Economic Policies and Impacts
ResumoEconometricaVolume 79, Issue 2 p. 555-600 The Economics of Labor Coercion Daron Acemoglu, Daron Acemoglu Dept. of Economics, Massachusetts Institute of Technology, 50 Memorial Drive, E52-371, Cambridge, MA 02142-1347, U.S.A. and Canadian Institute for Advanced Research; [email protected]Search for more papers by this authorAlexander Wolitzky, Alexander Wolitzky Dept. of Economics, Massachusetts Institute of Technology, 50 Memorial Drive, Cambridge, MA 02142-1347, U.S.A.; [email protected] We thank Stephen Morris, Andrew Postlewaite, four anonymous referees, and seminar participants at the Canadian Institute for Advanced Research, the Determinants of Social Conflict Conference, and MIT for useful comments and suggestions.Search for more papers by this author Daron Acemoglu, Daron Acemoglu Dept. of Economics, Massachusetts Institute of Technology, 50 Memorial Drive, E52-371, Cambridge, MA 02142-1347, U.S.A. and Canadian Institute for Advanced Research; [email protected]Search for more papers by this authorAlexander Wolitzky, Alexander Wolitzky Dept. of Economics, Massachusetts Institute of Technology, 50 Memorial Drive, Cambridge, MA 02142-1347, U.S.A.; [email protected] We thank Stephen Morris, Andrew Postlewaite, four anonymous referees, and seminar participants at the Canadian Institute for Advanced Research, the Determinants of Social Conflict Conference, and MIT for useful comments and suggestions.Search for more papers by this author First published: 14 February 2011 https://doi.org/10.3982/ECTA8963Citations: 114 AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat Abstract The majority of labor transactions throughout much of history and a significant fraction of such transactions in many developing countries today are “coercive,” in the sense that force or the threat of force plays a central role in convincing workers to accept employment or its terms. We propose a tractable principal–agent model of coercion, based on the idea that coercive activities by employers, or “guns,” affect the participation constraint of workers. We show that coercion and effort are complements, so that coercion increases effort, but coercion always reduces utilitarian social welfare. Better outside options for workers reduce coercion because of the complementarity between coercion and effort: workers with a better outside option exert lower effort in equilibrium and thus are coerced less. Greater demand for labor increases coercion because it increases equilibrium effort. We investigate the interaction between outside options, market prices, and other economic variables by embedding the (coercive) principal–agent relationship in a general equilibrium setup, and studying when and how labor scarcity encourages coercion. General (market) equilibrium interactions working through the price of output lead to a positive relationship between labor scarcity and coercion along the lines of ideas suggested by Domar, while interactions those working through the outside option lead to a negative relationship similar to ideas advanced in neo-Malthusian historical analyses of the decline of feudalism. In net, a decline in available labor increases coercion in general equilibrium if and only if its direct (partial equilibrium) effect is to increase the price of output by more than it increases outside options. 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