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Self‐directed productivity investment on the job

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  • Anthony M. Marino

Abstract

This paper considers a hidden action agency model in which an agent can be incentivized to simultaneously work and exert effort to invest in human capital or process innovation so as to increase productivity in a future period. We characterize the conditions under which the principal would and would not want to incentivize such multitasking and the conditions under which the agent would want to participate. The firm's support for investment is contingent on the agent's outside market option not being too high, and sufficient conditions for a separate contingent payment for productivity increase are presented.

Suggested Citation

  • Anthony M. Marino, 2024. "Self‐directed productivity investment on the job," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(8), pages 5464-5475, December.
    • Handle: RePEc:wly:mgtdec:v:45:y:2024:i:8:p:5464-5475
    DOI: 10.1002/mde.4334
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