Optimal Labor Contracts May Exhibit Wage Fluctuations Due to Wage Discrimination
AbstractConsider a labor market where the parties are able to write contracts contingent on the state of demand and productivity. If it is realistically assumed that the workers differ wrt. their reservation wages, then it becomes a natural presumption that firms on the market will offer several alternative contracts instead of just one and let workers choose between them. This may give a gain from wage discrimination. In a specific model of a labor market with one firm and two types of workers we show that it is indeed optimal for the firm to offer two different contracts. Further, we state plausible conditions in terms of the workers' attitudes towards risk which imply that optimal pairs of contracts feature wage fluctuations over the cycle on one of the contracts. This result is somewhat in contrast to a standard (interpretation of a) result from the theory of labor contracts.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 94-11.
Length: 22 pages
Date of creation: Sep 1994
Date of revision:
Contact details of provider:
Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (+45) 35 32 30 10
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk
More information through EDIRC
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann).
If references are entirely missing, you can add them using this form.