IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v190y2021icp154-163.html
   My bibliography  Save this article

Productivity investment with hidden action

Author

Listed:
  • Marino, Anthony M.

Abstract

This paper considers a hidden action agency model in which an agent can be incentivized to simultaneously work and exert effort to increase productivity. When such multitasking is optimal, it is implemented through a higher powered contract, unlike the standard multitasking case. We determine conditions under which the principal wants to incentivize concurrent working and productivity investment and conditions under which the agent would want to participate. We show that these conditions are not the same. Multitasking is compared to separated tasks. Our results can help explain the skills gap.

Suggested Citation

  • Marino, Anthony M., 2021. "Productivity investment with hidden action," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 154-163.
    • Handle: RePEc:eee:jeborg:v:190:y:2021:i:c:p:154-163
    DOI: 10.1016/j.jebo.2021.07.033
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268121003218
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2021.07.033?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Drew Fudenberg & Luis Rayo, 2019. "Training and Effort Dynamics in Apprenticeship," American Economic Review, American Economic Association, vol. 109(11), pages 3780-3812, November.
    2. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
    3. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-482, June.
    4. Anke S. Kessler & Christoph Lülfesmann, 2006. "The Theory of Human Capital Revisited: on the Interaction of General and Specific Investments," Economic Journal, Royal Economic Society, vol. 116(514), pages 903-923, October.
    5. Bengt Holmstrom, 1999. "Managerial Incentive Problems: A Dynamic Perspective," NBER Working Papers 6875, National Bureau of Economic Research, Inc.
    6. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    7. Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-636, May.
    8. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    9. Canice Prendergast, 1993. "The Role of Promotion in Inducing Specific Human Capital Acquisition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 523-534.
    10. Matthias Kräkel, 2016. "Human Capital Investment and Work Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 627-651, September.
    11. Bengt Holmström, 1999. "Managerial Incentive Problems: A Dynamic Perspective," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 169-182.
    12. Gonzalo Cisternas, 2018. "Career Concerns and the Nature of Skills," American Economic Journal: Microeconomics, American Economic Association, vol. 10(2), pages 152-189, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
    2. Alger Ingela & Ma Ching-to Albert & Renault Regis, 2012. "Experience Benefits and Firm Organization," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-35, September.
    3. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    4. repec:dau:papers:123456789/12408 is not listed on IDEAS
    5. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    6. Xin Jin, 2014. "The Signaling Role of Not Being Promoted: Theory and Evidence," Working Papers 0314, University of South Florida, Department of Economics.
    7. Koray Sayili, 2020. "Retaining skilled employees: A human capital model with innovation and entrepreneurship," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 911-923, September.
    8. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo.
    9. Eric S. Taylor & John H. Tyler, 2011. "The Effect of Evaluation on Performance: Evidence from Longitudinal Student Achievement Data of Mid-career Teachers," NBER Working Papers 16877, National Bureau of Economic Research, Inc.
    10. Jenter, Dirk & Cziraki, Peter, 2021. "The Market for CEOs," CEPR Discussion Papers 16281, C.E.P.R. Discussion Papers.
    11. Hanming Fang & Alessandro Gavazza, 2011. "Dynamic Inefficiencies in an Employment-Based Health Insurance System: Theory and Evidence," American Economic Review, American Economic Association, vol. 101(7), pages 3047-3077, December.
    12. Edwin Leuven, 2005. "The Economics of Private Sector Training: A Survey of the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 19(1), pages 91-111, February.
    13. Dan Bernhardt & Steeve Mongrain, 2010. "The Layoff Rat Race," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(1), pages 185-210, March.
    14. Tobias Hiller, 2023. "Training, Abilities and the Structure of Teams," Games, MDPI, vol. 14(3), pages 1-8, May.
    15. Matthias Kräkel, 2016. "Human Capital Investment and Work Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 627-651, September.
    16. Fleckinger, Pierre & Martimort, David & Roux, Nicolas, 2023. "Should They Compete or Should They Cooperate? The View of Agency Theory," TSE Working Papers 23-1421, Toulouse School of Economics (TSE), revised Jan 2024.
    17. Jin, Xin, 2014. "The Signaling Role of Note Being Promoted: Theory and Evidence," MPRA Paper 58484, University Library of Munich, Germany.
    18. Anja Schöttner & Veikko Thiele, 2010. "Promotion Tournaments and Individual Performance Pay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 699-731, September.
    19. Bingley, P. & Eriksson, T, 2001. "Pay Spread and Skewness. Employee Effort and Firm Productivity," Papers 01-2, Aarhus School of Business - Department of Economics.
    20. Patrick W. Schmitz, 2005. "Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 318-336, Summer.
    21. Marco Caliendo & Deborah A. Cobb-Clark & Cosima Obst & Helke Seitz & Arne Uhlendorff, 2022. "Locus of Control and Investment in Training," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1311-1349.
    22. Kristjan-Olari Leping, 2005. "Measuring the Specificity of Human Capital: a Skill-based Approach," Working Papers 134, Tallinn School of Economics and Business Administration, Tallinn University of Technology.

    More about this item

    Keywords

    Human capital; Investment; Agency;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:190:y:2021:i:c:p:154-163. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.