Fixed-Wages, Wage Differentials And Worker Heterogeneities
We study incentive-compatible labour contracts in the case where individual productivity, preference for leisure and time preference rate are unobservable by the principal in a two-period model. We first reduce this three-dimensional problem to a standard one-dimensional screening problem. Features of second-best labour contracts provide a rationale for both fixed-wages and wage differentials. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd/University of Adelaide and Flinders University.
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Volume (Year): 47 (2008)
Issue (Month): 4 (December)
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References listed on IDEAS
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