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Optimal Wage Distribution in Hierarchies

Author

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  • Francesc Dilmé i Soto

    (Departamnent de Teoria Economica Universitat de Barcelona (UB), Catalonia, Spain)

Abstract

Most of the large firms organization schemes consist in hierarchical structures of tiers with different wage levels. Traditionally the existence of this kind of organizations has been associated to the separation of productive and managerial or supervision tasks and differences in the skills of the workers. Nevertheless, in the present there are in firms with similarly skilled workers where the hierarchical structure could be related to an incentives scheme to make the agents work. The model we present tries to inquire how the firm owner should decide the optimal wage distribution in order to maximize the profits obtained by the firm.

Suggested Citation

  • Francesc Dilmé i Soto, 2007. "Optimal Wage Distribution in Hierarchies," Cuadernos de Economía - Spanish Journal of Economics and Finance, Asociación Cuadernos de Economía, vol. 30(82), pages 037-074, Enero-Abr.
    • Handle: RePEc:cud:journl:v:30:y:2007:i:83:p:037-074
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