Power, coercion, and the games landlords play

Naqvi, Nadeem; Wemhöner, Frederick

doi:10.1016/0304-3878(95)00010-n

Cited by 28 publications

(6 citation statements)

References 8 publications

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“…In more recent work, Basu (1986) and Naqvi and Wemhöner (1995) develop models in which landlords may "coerce" their tenants by inducing other agents to ostracize them if they do not agree to favorable contract terms with the landlord. Genicot (2002) develops a model in which workers are collectively better o¤ without the option of voluntarily entering into bonded labor agreements, as this stimulates the development of alternative forms of credit.…”

Section: Introductionmentioning

confidence: 99%

The Economics of Labor Coercion

Acemoğlu

Wolitzky

2009

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We thank seminar participants at MIT and Canadian Institute for Advanced Research for useful suggestions The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Section: Introductionmentioning

confidence: 99%

The Economics of Labor Coercion

Acemoğlu

Wolitzky

2009

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“…But given that property rights must here mean an assignment of rights over all possible actions, there is the possibility of ambiguity that is discussed below. 13 See Akerlof, 1976;Deshpande, 1999;Basu, 2000;Naqvi and Wemhoner, 1995;Hatlebakk, 2002;Villanger, 2004Villanger, , 2005 make an offer so that, by accepting it, the worker gets the same level of utility as (or maybe an epsilon more than) what he would get if he got nothing from the landlord and nothing from the merchant. And so the worker will accept this offer since it is as good as (or 0 better than) what his alternative is.…”

Section: Coercion and Voluntarinessmentioning

confidence: 99%

Coercion, contract and the limits of the market

Basu

2007

Soc Choice Welfare

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It is a widely accepted principle of economics that if two or more adults voluntarily agree to a contract or an exchange that has no negative fall-out on others, then the government should not stop such a contract. This is often called the 'principle of free contract' (PFC). There is a body of writing in economics which upholds the PFC. Yet, this ubiquitous principle is ill-defined and full of ambiguities. For instance, since it refers to voluntary choice, its proper use presumes an understanding of what is 'voluntary' and, therefore, also, of what is coercive. What is ironic is that, while philosophers and legal scholars have debated and analyzed these concepts and the validity of the principle of free contract, there is very little discussion of these in economics, even though so much of economics is founded on this principle. This has caused a lot of policy confusion. The aim of this paper is to construct general rules for when we may violate the PFC. The argument is constructed within the Paretian framework. Hence, the violation of the PFC is not justified by appeal to deontological ethics or non-welfarist criteria. This is not an easy task since the principle of free contract is often viewed as a rule that is a derivative of the Pareto principle.

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“…In more recent work, Basu (1986) and Naqvi and Wemhöner (1995) develop models in which landlords coerce their tenants by inducing other agents to ostracize them if they do not agree to favorable contract terms with the landlord. Genicot (2002) develops a model in which workers are collectively better off without the option of voluntarily entering into bonded labor agreements, because this stimulates the development of alternative forms of credit.…”

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confidence: 99%

The Economics of Labor Coercion

2011

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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. Our model also suggests that markets in slaves make slaves worse off, conditional on enslavement, and that coercion is more viable in industries that do not require relationship-specific investment by workers.

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Power, coercion, and the games landlords play

Cited by 28 publications

References 8 publications

The Economics of Labor Coercion

The Economics of Labor Coercion

Coercion, contract and the limits of the market

The Economics of Labor Coercion

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