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A note on incentive wages with human capital formation

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Author Info
Muysken,Joan
Zwick,Thomas (METEOR)

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Abstract

This paper shows that investment inhuman capital may be another reason for incentive wages in addition to "retain, recruit and motivate". It is shown under which circumstances firms pay wages in excess of the market clearing level in order to induce workers to invest. Investment in human capital is inefficient when workers can determine it due to rent sharing and sunk costs.

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Publisher Info
Paper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 012.

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Date of creation: 1996
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Handle: RePEc:dgr:umamet:1996012

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Keywords: labour economics ;

References listed on IDEAS
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  1. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November. [Downloadable!] (restricted)
  2. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  3. Akerlof, George A & Yellen, Janet L, 1988. "Fairness and Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 44-49, May. [Downloadable!] (restricted)
  4. Lindbeck, Assar & Snower, Dennis J, 1990. " Demand- and Supply-Side Policies and Unemployment: Policy Implications of the Insider-Outsider Approach," Scandinavian Journal of Economics, Blackwell Publishing, vol. 92(2), pages 279-305.
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  5. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March. [Downloadable!] (restricted)
  6. Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-45, June. [Downloadable!] (restricted)
  7. Stiglitz, Joseph E, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 194-227, May. [Downloadable!] (restricted)
  8. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-38, June. [Downloadable!] (restricted)
  9. Lindbeck, A. & Snower, D.J., 1990. "Interactions between the Efficiency Wage and Insider- Outsider Theories," Papers 474, Stockholm - International Economic Studies.
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