The dynamics of working hours and wages under implicit contracts

In this paper, we explore the dynamics of working hours and wages in a model economy where firm its workforce are linked to each other by an implicit contract. Specifically, develop deterministic stochastic framework which sets level labor utilization considering that workers' earnings tend adjust direction fixed level. Without any uncertainty about firm's profitability, show existence properties stationary solutions rely on factors usually determine enforceability contracts demonstrate move countercyclically towards allocation preferred firm. Moreover, adding does not overturn countercyclical pattern but is helpful explaining their dynamic behavior response demand shocks as well typical stickiness observed at macrolevel.