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Economic Development, Division Of Labor And Optimal Social Contracts

Posted on:2003-08-24Degree:DoctorType:Dissertation
Country:ChinaCandidate:X L WangFull Text:PDF
GTID:1116360062985397Subject:Political economy
Abstract/Summary:PDF Full Text Request
The dissertation studies how to solve asymmetric information problems for markets and organizations of China's transitional economy by designing optimal transaction rules and how to improve the relevant contracting environments by arranging optimal underlying institutions. Basically, the optimal transaction rules or institutions that could be designed or arranged are confined to legally enforceable formal contracts, and never involve those informal contracts, e.g. morality, culture and social customs. However, formal contracts and informal contracts are substitutive and complementary in solving asymmetric information problems. Therefore, the dissertation, on the one hand, makes a detailed analysis on the business morality that is considered as one of the most important informal contracts of modern society, on the other hand, focuses on studying how to design optimal labor contracts for China's public sector with principle-agent framework. The main content of the dissertation can be summarized as follows:(1) In order to analyse business moral behavior of modern society, two models are developed in the dissertation.In the first model, by considering the '"taste" for business moral commitment as one means by which businessman can gain more interest, it is revealed that there is a relationship between labor divisions and moral commitment consequent on purely private and individualistic activity in theabsence of government. The first model supports the following three arguments: (a) If labor division among the members of a society does not exist and all the members have the same specialized skills, business immoral behavior will be pervasive; (b) If there is fixed labor divisions among the members of a society, business immoral behavior will be constrained strongly due to the existence of the "punishing" for "bad" behavior; (c) In any real-world market economy, most labor divisions belong to a type of mobile labor division, which combines the features of non-division and fixed-division. The fixity of mobile labor division plays an important role in the forming of business moral behavior and constitutes the base of which stable moral behavior could exist in modern business societies.In the second model, I attempted to measure worker's moral commitment constraints in a competitive labor market. Here it should be made clear that the second model is just a theoretical model. So it may be interesting for future research to transform the model into a practical empirical model.(2) The principal-agent structure of public organization in public sector is characterized by a double principal-agent relationship. That is, on the one hand, there is the relationship between the population as the principal and government officials of public organization as its agents, on the other hand, government officials of public organization employ staff to be active in the implementation of the goal of public organization, which entails that government officials become the principal of staff. Thus, different from the problems typical of principal-agent relationships within private sector, the problems that hinder public organization from improving efficiency are double moral hazard. Put it in another way, the efficiency of public organization suffers not only from opportunistic behavior of staff as agents but also from opportunistic behavior of officials as principle. Based on the two elaborately defined concepts, Duty-fufilling-guarantee contract and Duty-overfufilling-elicitation contract, the dissertation gives a complete and perfect information dynamic game model to explain how moral hazardof officials as principle prevent Duty-overfufilling -elicitation contract from eliciting the more effort from staff of public organization. Hopefully, some policy implications of the model are helpful for China's public sector reform.(3) Along with the development and growth from China's private sector, the frequent brain drain from China's state-owned enterprises has caused so many problems that not only severely decrea...
Keywords/Search Tags:Contract, Incentive, Asymmetric information, Moral hazard
PDF Full Text Request
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