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Signaling and Screening of Workers' Motivation

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  • Josse Delfgaauw

    ()
    (Erasmus University Rotterdam)

  • Robert A.J. Dur

    ()
    (Erasmus University Rotterdam)

Abstract

This paper develops a model in which workers are heterogeneous in their intrinsic motivation to work at a firm. We characterise optimal incentive schemes and examine how the firm can attract and select highly motivated workers to fill a vacancy when workers’ motivation is private information. While posting a higher wage increases the probability of filling the vacancy, it decreases the expected average quality of job applicants because less motivated workers are induced to apply. The optimal wage scheme entails a trade-off between the probability of filling the vacancy, the rents left to the worker, and the expected worker's motivation. This discussion paper has resulted in a publication in the Journal of Economic Behavior and Organization , 62(4), 605-24.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-050/3.

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Date of creation: 28 May 2002
Date of revision: 04 Mar 2005
Handle: RePEc:dgr:uvatin:20020050

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Web page: http://www.tinbergen.nl

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Keywords: signaling and screening models; intrinsic motivation; monetary incentive schemes; minimum wages.;

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