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Competition for talent when firms' mission matters

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  • Barigozzi, Francesca
  • Burani, Nadia

Abstract

We study optimal non-linear contracts offered by a non-profit and a for-profit firm competing to attract workers, who are privately informed about their ability and motivation. Motivated workers are keen to be hired by the non-profit firm because they adhere to its mission. Workers with different ability self-select into firms depending on which organization holds a competitive advantage. This determines the sign and the composition of the wage differential between firms, which encompasses labor donations induced by motivation and the selection effect of ability. Our model thus rationalizes the mixed empirical evidence concerning for-profit vs non-profit wage differentials.

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  • Barigozzi, Francesca & Burani, Nadia, 2019. "Competition for talent when firms' mission matters," Games and Economic Behavior, Elsevier, vol. 116(C), pages 128-151.
    • Handle: RePEc:eee:gamebe:v:116:y:2019:i:c:p:128-151
    DOI: 10.1016/j.geb.2019.04.012
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    3. Thomas Coutrot & Coralie Perez, 2021. "When work becomes meaningless. The influence of meaningful work on job mobility, voice and sickness absence: a longitudinal analysis with the Working Conditions Survey 2013-2016 [Quand le travail p," Post-Print halshs-03324454, HAL.
    4. Thomas Coutrot & Coralie Perez, 2021. "Quand le travail perd son sens. L'influence du sens du travail sur la mobilité professionnelle, la prise de parole et l'absentéisme pour maladie : une analyse longitudinale avec l'enquête Conditions d," Documents de travail du Centre d'Economie de la Sorbonne 21020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Burani, Nadia & Mantovani, Andrea, 2020. "Non-linear pricing and conscious consumption," International Journal of Industrial Organization, Elsevier, vol. 68(C).

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    More about this item

    Keywords

    Multi-principals; Bidimensional asymmetric information; Skills; Intrinsic motivation; For-profit vs non-profit organizations; Wage differential;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M55 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Contracting Devices

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