The Theory of Internal Wage and Employment Structure
This article examines the behavior of a competitive firm in a world in which workers gradually acquire skill and experience. It is shown that the firm will not pay workers--who are indexed in this model by seniority--the value of their marginal product. The article also proposes a simple incentive argument as a possible explanation for the fact that many firms seem to pay wages based upon age and length of service.
Volume (Year): 12 (1981)
Issue (Month): 1 (Spring)
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