Institutions and Contract Enforcement

We provide evidence on how two important types of institutions – dismissal barriers, and bonus pay – affect contract enforcement behavior in a market with incomplete contracts and repeated interactions. Dismissal barriers are shown to have a strong negative impact on worker performance, and market efficiency, by interfering with firms' use of firing threat as an incentive device. Dismissal barriers also distort the dynamics of worker effort levels over time, cause firms to rely more on the spot market for labor, and create a distribution of relationship lengths in the market that is more extreme, with more very short and more very long relationships. The introduction of a bonus pay option dramatically changes the market outcome. Firms are observed to substitute bonus pay for threat of firing as an incentive device, almost entirely offsetting the negative incentive and efficiency effects of dismissal barriers. Nevertheless, contract enforcement behavior remains fundamentally changed, because the option to pay bonuses causes firms to rely less on long-term relationships. Our results show that market outcomes are the result of a complex interplay between contract enforcement policies and the institutions in which they are embedded

LOSS AVERSION AND LABOR SUPPLY

In many occupations, workers’ labor supply choices are constrained by institutional rules regulating labor time and effort provision. This renders explicit tests of the neoclassical theory of labor supply difŽ cult. Here we present evidence from studies examining labor supply responses in “neoclassical environments” in which workers are free to choose when and how much to work. Despite the favorable environment, the results cast doubt on the neoclassical model. They are, however, consistent with a model of reference-dependent preferences exhibiting loss aversion and diminishing sensitivity.labor supply, loss aversion, neoclassical environments

Implicit Contracts, Unemployment, and Labor Market Segmentation

We analyze the impact of imperfect contract enforcement on the emergence of unemployment. In an experimental labor market where trading parties can form long-term employment relationships, we compare a work environment where effort is observable, but not verifiable to a situation where explicit contracts are feasible. Our main result shows that unemployment is much higher when third-party contract enforcement is absent. Unemployment is involuntary, being caused by firms' employment and contracting policy. Moreover, we show that implicit contracting can lead to a segmentation of the labor market. Firms in both segments earn similar profits, but workers in the secondary sector face much less favorable conditions than their counterparts in primary-sector jobs.incentives, implicit contracts, unemployment, fairness, dual labor markets

CORN AND SOYBEAN CONSUMPTION AND PRODUCTION IN VIRGINIA

Crop Production/Industries,

Institutions and Contract Enforcement

We provide evidence on how two important types of institutions – dismissal barriers, and bonus pay – affect contract enforcement behavior in a market with incomplete contracts and repeated interactions. Dismissal barriers are shown to have a strong negative impact on worker performance, and market efficiency, by interfering with firms' use of firing threat as an incentive device. Dismissal barriers also distort the dynamics of worker effort levels over time, cause firms to rely more on the spot market for labor, and create a distribution of relationship lengths in the market that is more extreme, with more very short and more very long relationships. The introduction of a bonus pay option dramatically changes the market outcome. Firms are observed to substitute bonus pay for threat of firing as an incentive device, almost entirely offsetting the negative incentive and efficiency effects of dismissal barriers. Nevertheless, contract enforcement behavior remains fundamentally changed, because the option to pay bonuses causes firms to rely less on long-term relationships. Our results show that market outcomes are the result of a complex interplay between contract enforcement policies and the institutions in which they are embedded.employment protection, efficiency wages, bonus pay, incomplete contracts, firing costs, experiment

Institutions and Contract Enforcement

We provide evidence on how two important types of institutions – dismissal barriers, and bonus pay – affect contract enforcement behavior in a market with incomplete contracts and repeated interactions. Dismissal barriers are shown to have a strong negative impact on worker performance, and market efficiency, by interfering with firms' use of firing threat as an incentive device. Dismissal barriers also distort the dynamics of worker effort levels over time, cause firms to rely more on the spot market for labor, and create a distribution of relationship lengths in the market that is more extreme, with more very short and more very long relationships. The introduction of a bonus pay option dramatically changes the market outcome. Firms are observed to substitute bonus pay for threat of firing as an incentive device, almost entirely offsetting the negative incentive and efficiency effects of dismissal barriers. Nevertheless, contract enforcement behavior remains fundamentally changed, because the option to pay bonuses causes firms to rely less on long-term relationships. Our results show that market outcomes are the result of a complex interplay between contract enforcement policies and the institutions in which they are embedded.incomplete contracts; bonus pay; efficiency wages; employment protection; firing costs; experiment

Institutions and Contract Enforcement

We provide evidence on how two important types of institutions – dismissal barriers, and bonus pay - affect contract enforcement behavior in a market with incomplete contracts and repeated interactions. Dismissal barriers are shown to have a strong negative impact on worker performance, and market efficiency, by interfering with firms’ use of firing threat as an incentive device. Dismissal barriers also distort the dynamics of worker effort levels over time, cause firms to rely more on the spot market for labor, and create a distribution of relationship lengths in the market that is more extreme, with more very short and more very long relationships. The introduction of a bonus pay option dramatically changes the market outcome. Firms are observed to substitute bonus pay for threat of firing as an incentive device, almost entirely offsetting the negative incentive and efficiency effects of dismissal barriers. Nevertheless, contract enforcement behavior remains fundamentally changed, because the option to pay bonuses causes firms to rely less on long-term relationships. Our results show that market outcomes are the result of a complex interplay between contract enforcement policies and the institutions in which they are embedded.institutions, contracts, contract enforcement, market experiment

Production, losses, and germination of Ceanothus Fendleri seeds in an Arizona ponderosa pine forest

I quantified seed production and ovule losses for Ceanothus fendleri Gray (Fendler ceanothus) plants protected from large ungulate herbivores in a ponderosa pine (Pinus ponderosa [Laws]) forest of northern Arizona. I also tested seed germination responses to cold stratification and heat treatments in the laboratory. Fruit production on fecund stems ranged from 7.4 to 38.2 fruits per stem, which equated to 22.2118.2 potential seeds based on 3 ovules per fruit. Stems that produced fruit were significantly large relative to their expected sizes. Predispersal ovule losses ranged from 70.7(percent) to 91.4(percent) across the 2 years studied. A chalcidoid seed parasite (Eurytoma squamosa Bugbee) consumed 11(percent)28(percent) of the total number of seeds produced. Postdispersal seed predation varied from 0(percent) to 24(percent) and was significantly affected by forest floor substrate in 1 study year. Cumulative ovule losses were estimated to be 71(percent)92(percent). Cold stratification did not significantly affect seed germination, and exposure to 90C resulted in the highest germination percentage. Both dormant and nondormant seeds suggested a bet-hedging life history strategy. This study provides basic ecological information important for management of ponderosa pine forest and nursery production of C. fendleri

Fact sheet: Long-term herbivore exclusion for recovery of buckbrush populations during restoration of ponderosa pine forests in northern Arizona

Open conditions created by restoration activities in ponderosa pine (Pinus ponderosa Laws.) forests of the American Southwest can lead to increases in understory plant productivity but also attract large ungulate herbivores. New plant growth stimulated by tree thinning and prescribed fire can provide greater forage quantity and quality for herbivores, but grazing pressure on the recovering understory may be high. Some management options during the period when understories are recovering include excluding herbivores from the site or protecting individual plants for a number of years following restoration treatments. Short-term protection of grazed species may provide opportunity for their escape through development of mass or structural defenses such as spines or thorns. For example, Huffman and Moore (2003) showed that two years after forest treatments buckbrush (Ceanothus fendleri Gray) plants protected from mule deer and Rocky Mountain elk had greater stem number, longer stems, and greater current-year biomass than unprotected plants. In contrast, branches of unprotected plants were heavily browsed and just 8 percent of these plants produced flowers. Herbivory pressure also may be lessened with increasing plant community diversity and as more forage options become available to herbivores. However, it is unclear how long protection of grazed plants is needed. Chancellor et al. (2008) showed that buckbrush plants exposed to herbivores after seven years of protection had similar stem lengths and stem numbers as plants that continued to be protected. Leaf area and leaf biomass, however, were significantly less on the recently exposed plants than on protected plants. In this study, we wanted to determine if long-term protection from herbivores was required to restore buckbrush abundance and potential reproduction after forest restoration treatments that were comprised of tree thinning and prescribed fire Buckbrush is a shrub common in ponderosa pine forests of the southwestern U.S. It is important for soil nutrient budgets, understory structure, and habitat for wildlife. We re-measured buckbrush plots (10.8 ft2 (1 m2) in size) in the following groups: 1) unprotected (never protected from herbivores); 2) short-term protection (exclosures installed in 1999, removed in 2006); and 3) long-term protection (exclosures installed in 1999 and maintained throughout the 12-year study period)

Fact sheet: Influence of time since fire on pinyon-juniper woodland structure

Pinyon-juniper ecosystems presently occur on approximately 50 million acres across the semi-arid landscapes of the western United States