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Thesis advisor: Anant Nyshadham / Thesis advisor: Kit Baum / The dissertation consists of three independent explorations of labor market dynamics in developing countries. I first investigate how minimum wages affect employment and investment decision of firms in India and how they can lead to accelerated automation and offshoring. Then, I investigate how managers of garment production lines in India's largest ready-made garment producer establish informal agreements to deal with worker absenteeism shocks. Finally, I study how Indonesian households learn about their productivity in different sectors of the economy and show that they often spend years, if not decades, in sectors where they are less productive which depresses their earning potentials, but they converge to their most productive sector over time. In the first chapter, "Effect of Minimum Wages on Automation and Offshoring Decisions of Firms: Evidence from India", I study the effect of India's local minimum wages on the production structure of firms in the formal economy. I compile data on the country's numerous minimum wages which vary at the state, year, and industry level, and show that changes to these wages have important effects on firm-level capital investment and employment of different types of employees. The effects depend on the firms' ability to automate and offshore certain tasks. Using a difference-in-difference approach, I show that firms in the average industry, that is, firms in industries neither intensive in routine nor offshorable tasks, continue to invest in machinery and computers at a rate of 8% per year following a minimum wage hike. However, they substitute payroll workers with managers and contract workers less likely to be bound by the minimum wage. Firms in industries intensive in routine tasks that are easier to automate invest 6.1% more in machinery and 4% more in computers, at the expense of payroll workers. Firms in industries intensive in tasks easier to do remotely continue to invest in machinery and computers, but the rate of investment in computers falls by 6.2% following a minimum wage hike, and payroll worker employment falls as well. This suggests that some tasks that combine workers and computers, like data analysis, may be offshored. These results support the predictions of a task-based production model, and indicate that minimum wages have a strong effect on the structure of production at the firm level, leading some towards increased rates of automation and offshoring. In the second chapter, "Absenteeism, Productivity, and Relational Contracts Inside the Firm", joint with other researchers, we study relational contracts among managers using unique data that tracks transfers of workers across teams in Indian ready-made garment factories. We focus on how relational contracts help managers cope with worker absenteeism shocks, which are frequent, often large, weakly correlated across teams, and which substantially reduce team productivity. Together these facts imply gains from sharing workers. We show that managers respond to shocks by lending and borrowing workers in a manner consistent with relational contracting, but many potentially beneficial transfers are unrealized. This is because managers' primary relationships are with a very small subset of potential partners. A borrowing event study around main trading partners' separations from the firm reinforces the importance of relationships. We show robustness to excluding worker moves least likely to reflect relational borrowing responses to idiosyncratic absenteeism shocks. Counterfactual simulations reveal large gains to reducing costs associated with forming and maintaining additional relationships among managers. In the last chapter, "Learning, Selection, and the Misallocation of Households Across Sectors", joint with other researchers, we study the role of labor misallocation (i.e., suboptimal sorting of households across sectors) in explaining low productivity in developing countries. We estimate a generalized earnings equation with dynamic correlated random coefficients, allowing households to learn about their relative productivity across the agricultural and non-agricultural sectors. Estimates show that households sort across sectors on comparative advantage, but learn and converge slowly over time, with many households spending substantial time in a suboptimal sector. Roughly 33% of households are misallocated to start, earning 64% less on average than they could have if they were properly sorted across sectors. Our approach nests several alternative models which can be ruled out, including those without dynamics and/or heterogeneity in relative productivity across sectors. We also evaluate alternative interpretations for the dynamic sorting we observe in the data such as saving out of financial constraints and skill accumulation or learning by doing. / Thesis (PhD) — Boston College, 2022. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

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Cette thèse cherche à étudier les liens existants entre les contrats formels et les comportements coopératifs. Les contrats formels étant censés faciliter la collaboration et éviter des incompréhensions coûteuses entre les parties, nous nous intéressons dans un premier temps à la manière dont le contrat formel impacte sur la capacité des parties à coopérer. Nous analysons ensuite, dans un même ordre d’idée, la coopération à travers le prisme des renégociations contractuelles. L’objectif est alors d’étudier la façon dont les contrats s’adaptent à un environnement changeant à travers le temps. Enfin, l’étude se porte sur l’impact de l’existence de rapports informels, considérés par la littérature antérieure comme, de manière alternative, substitut ou complément aux contrats formels. Plus précisément, nous étudions comment l’existence de mécanismes relationnels influe sur les choix contractuels. Ainsi, l’objectif est d’améliorer la compréhension du rôle joué par les contrats formels et la coopération informelle dans les relations et d’enrichir la théorie sur les déterminants de l’incomplétude contractuelle. Nos résultats suggèrent que le rôle du contrat formel dans les relations dépend fortement du contexte et de l’identité des parties concernées. Nos résultats permettent également d’identifier la capacité des parties à soutenir un accord relationnel comme une nouvelle source endogène d’incomplétude contractuelle. Enfin, nous obtenons également que les adaptations contractuelles, par le biais des renégociations, ne sont pas nécessairement nocives pour les parties. Au final, nous pensons que cette thèse contribue à la littérature sur le débat entre complémentarité et / ou substituabilité des modes de gouvernance formels et informels ainsi qu’à la littérature sur le lien entre contrat relationnel et l’incomplétude contractuelle endogène. Par conséquent, l’implication majeure de ce travail de thèse est illustrée par la nécessité pour les parties de réfléchir attentivement au contrat initial et aux efforts consentis pour sa rédaction. En premier lieu car le contrat formel impacte sur leur capacité à coopérer ex post et, en second lieu, car le contrat formel peut se révéler être trop complet par rapport au niveau de complétude optimal. / This Ph.D. dissertation seeks to investigate the existing links between cooperative behavior and formal contracts. First, because formal agreements are supposed to facilitate smooth collaboration and avoid costly misunderstandings, we are interested in how formal contracts impact on the ability of parties to cooperate. Following the same intuition, we also analyze cooperation through the lens of renegotiations in order to investigate how contracts adapt themselves through time in a changing environment. Second, we also study the impact of the existence of informal dealings, alternatively considered in previous literature as substitute or complement to formal contracting. More precisely, we aim to investigate how the existence of relational mechanisms may impact on contractual choices. Our goal is thus to improve the understandings of the role played by formal contract and informal cooperation in relationships and to enrich the theory of the determinants of incomplete contract. Our results suggest that the role of formal contract in relationships strongly depends on the context and the identity of parties. Our results also identify the ability of the parties to sustain a relational agreement as a new source of endogenous contractual incompleteness. Finally, we also find that adaptations through contractual renegotiations are not necessarily harmful for the contracting parties. We believe that this Ph.D. dissertation contributes to the literature on the debate of complementarity and/or the substitutability of formal and informal governance and to the literature on the link between relational contract and endogenous contractual completeness. In the end, the overall implication is the necessity for parties to carefully think about the initial contract they draft. Because it has an impact on their ability to cooperate ex post and also because contracts can be over-complete compared to the efficient (i.e. socially optimal) level of completeness.

This dissertation consists of three essays. The first essay examines a general theory of information based on informal contracting. The measurement problem—the disparity of true and measured performances—is at the core of many failures in incentive systems. Informal contracting can be a potential solution since, unlike in formal contracting, it can utilize a lot of qualitative and informative signals. However, informal contracting must be self-enforced. Given this trade-off between informativeness and self-enforcement, I show that a new source of statistical information is economically valuable in informal con- tracting if and only if it is sufficiently informative that it refines the existing pass/fail criterion. I also find that a new information is more likely valuable, as the stock of existing information is large. This information theory has implications on the measurement problem, a puzzle of relative performance evaluation and human resources management. I also provide a methodological contribution. For tractable analysis, the first-order approach (FOA) should be employed. Existing FOA-justifying conditions (e.g. the Mirrlees-Rogerson condition) are so strong that the information ranking condition can be applied only to a small set of information structures. Instead, I find a weak FOA- justifying condition, which holds in many prominent examples (with multi- variate normal or some of univariate exponential family distributions). The second essay analyzes the effectiveness of managerial punishments in mitigating moral hazard problem of government bailouts. Government bailouts of systemically important financial or industrial firms are necessary ex-post but cause moral hazard ex-ante. A seemingly perfect solution to this time-inconsistency problem is saving a firm while punishing its manager. I show that this idea does not necessarily work if ownership and management are separated. In this case, the shareholder(s) of the firm has to motivate the manager by using incentive contracts. Managerial punishments (such as Obama’s $500,000 bonus cap) could distort the incentive-contracting program. The shareholder’s ability to motivate the manager could then be reduced and thereby moral hazard could be exacerbated depending on corporate governance structures and punishment measures, which means the likelihood of future bailouts increases. As an alternative, I discuss the effectiveness of shareholder punishments. The third essay analyzes how education affect workers’ career-concerns. A person’s life consists of two important stages: the first stage as a student and the second stage as a worker. In order to address how a person chooses an education-career path, I examine an integrated model of education and career-concerns. In the first part, I analyze the welfare effect of education. In Spence’s job market signaling model, education as a sorting device improves efficiency by mitigating the lemon market problem. In my integrated model, by contrast, education as a sorting device can be detrimental to social welfare, as it eliminates the work incentive generated by career-concerns. In this regard, I suggest scholarship programs aimed at building human capital rather than sorting students. The second part provides a new perspective on education: education is job-risk hedging device (as well as human capital enhancing or sorting device). I show that highly risk-averse people take high education in order to hedge job-risk and pursue safe but medium-return work path. In contrast, lowly risk-averse people take low education, bear job-risk, and pursue high-risk high-return work path. This explains why some people finish college early and begin start-ups, whereas others take master’s or Ph.D. degrees and find safe but stable jobs. / text

Submitted by Thiago Ribeiro (thiago.alves@terra.com.br) on 2012-12-31T21:15:27Z No. of bitstreams: 1 Dissertacao Thiago Alves Ribeiro.pdf: 2000492 bytes, checksum: 43183d5942a1488e57808decff67c8e4 (MD5) / Approved for entry into archive by Suzinei Teles Garcia Garcia (suzinei.garcia@fgv.br) on 2013-01-02T12:19:38Z (GMT) No. of bitstreams: 1 Dissertacao Thiago Alves Ribeiro.pdf: 2000492 bytes, checksum: 43183d5942a1488e57808decff67c8e4 (MD5) / Made available in DSpace on 2013-01-02T12:39:55Z (GMT). No. of bitstreams: 1 Dissertacao Thiago Alves Ribeiro.pdf: 2000492 bytes, checksum: 43183d5942a1488e57808decff67c8e4 (MD5) Previous issue date: 2012-12-04 / This work is an empirical study of the contractual practices adopted by Embraer after its privatization in 1994. We also analyze the contractual arrangement used to enable the aircrafts’ projects that were responsible for the company's resurgence in the late 1990s. A fundamental aspect of the contractual engineering efforts was the creation of Risk-Partnerships between Embraer and a selected group of key suppliers to co-develop an aircraft. The analysis of the collected data, points to the epistemological relevancy of using new analytical tools to understand the contractual practices that have been employed and its role in development. Therefore, we adopt the relational contract theory as a theoretical lens to analyze the risk-partnership model and investigate the role played by relational elements in the success of the ERJ 145 and EMBRAER 170/190 programs. The central hypothesis that guides this work states that, in the innovative contractual arrangement involving Embraer, foreign suppliers and BNDES, the contractual relationship was built through promissory and non-promissory mechanisms that have projected the exchange, and the patterns of normativity that were created transcended the written contract. The contribution of relational contract theory to the analysis of such practices is twofold. The first contribution is mainly descriptive, as it provides more comprehensive and powerful theoretical tools to understand the real dynamics of the contractual practices that have been studied. The second contribution, of a normative kind, consists in clarifying the relational aspects that compose, alongside promissory elements, a certain internal normativity to the contract, which regulates the agents’ conduct throughout the relationship. On the ERJ 145 and EMBRAER 170/90 programs, we try to demonstrate that (more) relational contractual arrangements, instead of conventional discrete contractual supplying relationships, were critical to the success of the projects and even for their own feasibility. In this sense, relational contracts theory provides analytical categories that not only offer more adequate theoretical tools to describe relationships such as the one under study, but also provides, through a more rich and comprehensive description, lessons on how to design contracts. This is important to demonstrate how the problem of the implicit dimensions of contracts transcends the field of contract theory and contractual justice and becomes highly relevant to the research agenda in the Law and Development field. / O presente trabalho é um estudo empírico das práticas contratuais adotadas pela EMBRAER posteriormente ao seu processo de privatização em 1994, e do arranjo contratual empregado para viabilizar a realização dos projetos de aeronaves responsáveis pelo ressurgimento da empresa ao final da década 1990. Aspecto fundamental da engenharia contratual empreendida foi a formação das chamadas Parcerias de Risco entre a Embraer e um grupo selecionado de fornecedores-chave visando o co-desenvolvimento das aeronaves. A análise das informações obtidas na pesquisa aponta a importância epistemológica de se utilizar novos instrumentos de análise que permitam compreender melhor as práticas contratuais empregadas e seu papel no desenvolvimento. Assim, utilizamos a teoria relacional dos contratos como lente teórica para analisar o modelo de parcerias de risco e, por meio dela, investigar qual o papel exercido pelos elementos relacionais no sucesso dos programas ERJ 145 e EMBRAER 170/190. A hipótese central que norteia o trabalho é a de que, no inovador arranjo contratual que envolveu a Embraer, fornecedores estrangeiros e o BNDES, a relação contratual foi construída por meio de mecanismos promissórios e não-promissórios de projeção de trocas, e os padrões de normatividade estabelecidos entre as partes transcenderam o contrato escrito. A contribuição da teoria relacional dos contratos para a análise de tais práticas possui duplo caráter. A primeiro contribuição é eminentemente descritiva, ao fornecer um instrumental teórico mais abrangente e poderoso para compreender a real dinâmica das práticas contratuais em análise. A segunda contribuição, de natureza normativa, consiste em explicitar aspectos relacionais que compõem, juntamente com os elementos promissórios, uma certa normatividade interna ao contrato que informa a conduta dos agentes ao longo da relação. Nos programas ERJ 145 e EMBRAER 170/90, procuramos demonstrar como a formulação de um arranjo contratual mais relacional em substituição ao tradicional conjunto de relações contratuais de fornecimento descontínuas, foi fundamental para o sucesso dos projetos e até mesmo para a sua própria viabilização. Nesse sentido, a teoria relacional dos contratos fornece categorias de análise que não apenas oferecem um ferramental teórico mais adequado para descrever relações como a do caso em estudo, mas também fornece, por meio de uma descrição mais rica e abrangente, lições sobre como desenhar contratos. Isto é importante para demonstrar como a problemática das dimensões implícitas do contratos transcende o campo da teoria contratual e da justiça contratual e apresenta-se de grande relevância para a agenda de pesquisa em Direito e Desenvolvimento.

<p>This study uses the Large Commercial Producer Survey distributed by Purdue University in 2021. It was analyzed using a Marginal Probability Effects Probit Model to evaluate driving factors behind relational contracts and loyalty in agricultural capital equipment.</p>

No description available.

Submitted by Filipe dos Santos (fsantos@pucsp.br) on 2016-08-16T12:19:26Z No. of bitstreams: 1 Moacyr da Costa Neto.pdf: 1362537 bytes, checksum: 12379c7df64e67d7138cad12bd92c189 (MD5) / Made available in DSpace on 2016-08-16T12:19:26Z (GMT). No. of bitstreams: 1 Moacyr da Costa Neto.pdf: 1362537 bytes, checksum: 12379c7df64e67d7138cad12bd92c189 (MD5) Previous issue date: 2016-03-29 / The penalty clause is a tradition in contracts. In Brazil, there is a consolidated understanding of it as a device that replaces the proposed role of the obligation agreed upon by the compensation required, in case the partners do not meet their obligations. The penalty clause also focuses on the classification of the delay as a way to reinforce the fulfillment of the obligation. In both cases, control of the penalty established will be kept, in order to prevent what could be considered unfair enrichment by the lender. The problem is that the socioeconomic situation, increasingly complex, requires more flexible coordination models which may enable contractors to take care of their interests with freedom and in a responsible way. The possibility presently being discussed is based on the relational contracts, because a certain incommensurability in the equivalence of the exchanges planned for the future is typical of them, and depends fundamentally on the confidence that a party places upon the other. In this situation, failure to perform what has been agreed upon - understood as the prohibition to exploit vulnerabilities -, will make room for punition strictu sensu not connected to indemnification purposes. Such strategy aims to reinforce trust as an indispensable duty, and its objective is to keep the contractual relationship. From an economic perspective, the solution offered, that is, the use of the penalty clause, will be a tool for reducing the transactional costs. / A cláusula penal é um instituto tradicional. Consolidou-se na experiência brasileira sua compreensão como dispositivo que desempenha o papel de proposta de substituição da obrigação avençada pela indenização prefixada, na hipótese de sua inexecução total, ou incide por ocasião da tipificação do atraso, concorrendo com o cumprimento da obrigação. Em ambas as hipóteses, haverá o controle de redução equitativa da multa fixada, evitando-se o enriquecimento sem causa do credor. O problema é que a ordem socioeconômica, cada vez mais multifacetada, exige modelos de coordenação das relações mais flexíveis e que permitam aos contratantes dirigi-los com liberdade e responsabilidade. Essa possibilidade é estudada com base no exemplo dos contratos relacionais, por ser considerado um tipo contratual caracterizado por certa incomensurabilidade na equivalência das trocas projetadas para o futuro, é dependente fundamentalmente da confiança que um contratante deposita no outro. Nesta situação, a inexecução do dever de confiança, compreendido como a proibição de exploração de vulnerabilidades, permitirá a imposição de sanção em sentido estrito, desapegada da finalidade indenizatória. A estratégia é destinada ao reforço dos deveres de confiança e assistida pelo princípio da conservação do vínculo contratual. Numa perspectiva econômica, a solução pensada é responsável por diminuir os custos da transação

L’imprévision est un thème à la frontière entre liberté contractuelle et justice contractuelle. Cependant, un nouveau regard peut être porté sur cette institution du droit des contrats grâce à la théorie des contrats relationnels développée par Ian R. Macneil ou encore à travers le contrat-coopération théorisé par Suzanne Lequette. Ces théories invitent à prendre en considération la valeur intrinsèque du lien contractuel et l’incomplétude du contrat. L’imprévision fait donc partie intégrante des contrats relationnels de par leur nature. La vocation première des contrats relationnels est de perdurer, obligeant les contractants à des normes de coopération et de flexibilité. Sous couvert de bonne foi, la relationnalité serait le fondement des changements de circonstances. Une étude comparative du régime des changements de circonstances apporte certaines précisions. Il semble exister deux approches des changements de circonstances, l’une restreinte aux modifications économiques et l’autre étendue, basée sur l’objectif ou le fondement contractuel. Une approche étendue de l’imprévision semble nécessaire dans les contrats relationnels. Enfin, les effets des changements de circonstances devraient donner priorité au maintien de la relation et à la norme de coopération en imposant une renégociation puis en permettant une adaptation judiciaire des termes de l’engagement. La résiliation, contraire à la nature des contrats relationnels, ne devrait intervenir qu’exceptionnellement. / Hardship is a topic at the border between contractual freedom and contractual justice. However, a new glance can be carried on this institution of contract law through the theory of relational contracts developed by Ian R. Macneil or the contrat-cooperation theorised by Suzanne Lequette. This theory invites to take into account the intrinsic value of the contractual link and the incompleteness of the contract. Imprévision thus forms integral part of the relational contracts from their nature. The primary purpose of the relational contrat is to continue, forcing the contractors to standards of cooperation and flexibility. According to good faith, the relationnality would be the foundation of changed of circumstances. A comparative study of the regime of changed of circumstances makes certain clarifications. There appear two approches of the changed of circumstances, one restricted based on economic modifications, and the second wide one, based on the purpose or foundation of the contract. Finally, the effects of the changed of circumstances should give priority to maintain the relation and the norm of cooperation by imposing renegotiation then by allowing judicial adaptation of the terms of the contract. Termination, contrary to the nature of relational contracts, should intervene only exceptionally.