The Share Economy with Efficiency Wages

This paper examines the cyclical implications of share contracts in an efficiency wage model, with wage and share economy firms facing a common labor market constraint. In the efficiency wage context, I find that the share economy will no longer remain at full employment in the face of modest-sized demand shocks. But suitably amended, Weitzman's (1983, 1984, 1985, 1986) conclusions regarding the cyclical employment benefits of share arrangements extend to an efficiency wage model.