Introduction

From an external point of view, the treatment of labor contracts by modern microeconomic theory reveals an exceptional uneasiness. Either they are entirely unspecific, similar to sales contracts for a commodity (except that the commodity consists now of a service, rather than a good stricto sensu): this is the road followed by general equilibrium theory (see Debreu 1959, §2.4; for more subtle details, see Arrow and Hahn 1971, pp. 75–6); or they show some specific features, which makes them instances of more general types of contracts: insurance contracts (see Rosen 1985) or principal–agent relationships (see Salanié 1994). Indeed lawyers from any country in the industrial world (see Supiot 1994, part II) could only be surprised by the apparent reluctance of economic theory to deal straightforwardly with the essential property of labor contracts: the compliance of the salaried worker with his employer's authority (i.e. the acknowledged right of giving orders), in exchange for a predetermined wage, independent for the main part of the final proceeds.

Now the surprise is reinforced, not alleviated, by the fact that there is one – exactly one – such model of labor contract, in the economic literature: the one built by Simon (1951). Of course, some economists were aware that an authority relationship should lie at the heart of the contractual link between employer and employee (for an early mention, see Coase 1937). But it was not until 1951 that the first mathematical model of authority relationship was devised by Simon, drawing on the work of Barnard (1938), an expert in management and not an academic.