Pierre Dubois
Toulouse School of Economics



(Monday, 2nd May 2005)

Title : The Econometrics of Contracts

This lecture will present the different methods used for the empirical study of economics of contracts. We will present several methods that depend on the available data and the empirical questions. We will study these different approaches through examples of applications in different fields like labor, agriculture, and the regulation of public utilities. Recent developments and identification questions will be addressed carefully. We will see how the link between the theoretical models and the empirical observation can be done for estimation and testing of models of contracts under asymmetric information (moral hazard and/or adverse selection), limited commitment. The lecture will underline the methodologies that can be used for different contract models with their advantages and drawbacks. In conclusion, we will underline some interesting directions for future research.

  1. Introduction
  2. Structural estimation of an adverse selection model of regulation with cross-sectional data (with reference to the example of Wolak, 1994)
  3. Structural estimation of a moral hazard model with panel data (with reference to Paarsch and Shearer, Dubois and Vukina)
  4. Conclusion

Bibliographical references :

Must read reference : Chiappori P.A. and B. Salanié (2003). "Testing contract theory: A Survey of Some Recent Work", in Advances in Economics and Econometrics, Econometric Society Monographs, 8 th World Congress, Volume 1, available as:

Dubois P. (2002), "Moral Hazard, Land Fertility and Sharecropping in a Rural Area of the Philippines", Journal of Development Economics.

Must read reference : Dubois P. and T. Vukina (2004) “Optimal Incentives under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data”, mimeo.

Paarsch H. and Shearer B. (2000), "Piece rates, fixed wages, and incentive effects: Statistical Evidence from payroll records", International Economic Review 41(1), February 2000, pages 59-92.

Wolak F. (1994), "An econometric analysis of the asymmetric information, regulator-utility interaction", Annales d’Economie and de Statistique,, available as: