Product Market Conditions and Job Design
By linking product market factors to job design, this paper provides an explanation to the puzzling question of why firms under rather similar labor market conditions sometimes adopt homogeneous, but other times heterogeneous, job designs. Compared to broadly defined jobs (BDJs), narrowly defined jobs (NDJs) help to save training cost. But, under NDJ, coordination is more difficult and the odds of a quality problem greater, which in the linear-city model adopted in this paper means a location shock to the firm. When consumer sensitivity to product specification (travel cost) is sufficiently high (low), a firm will (not) adopt BDJ to avoid a location shock and the resulting intensified price competition. In the intermediate range of travel cost, a duopolist prefers to let the other firm bear the extra training cost of BDJ, but would incur the cost itself if the other does not. In this range, if entry is simultaneous, multiple equilibria arise and they do not tell which firm will adopt BDJ or NDJ. If entry is sequential, the number of equilibria is reduced from three to one, in which the early comer will adopt NDJ and the late comer BDJ. A monopolist's job design choice is always deterministic. A job design may have a positive or negative social welfare implication depending on market structure and travel cost.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (612) 624-2500
Fax: (612) 624-8360
Web page: http://www.chrls.csom.umn.edu/Email:
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Grossman, G.M. & Helpman, E., 1999.
"Incomplete Contracts and Industrial Organization,"
25-99, Tel Aviv.
- Gene M. Grossman & Elhanan Helpman, 1999. "Incomplete Contracts and Industrial Organization," NBER Working Papers 7303, National Bureau of Economic Research, Inc.
- Grossman, Gene & Helpman, Elhanan, 1999. "Incomplete Contracts and Industrial Organization," CEPR Discussion Papers 2280, C.E.P.R. Discussion Papers.
- Gene M. Grossman & Elhanan Helpman, 1999. "Incomplete Contracts and Industrial Organization," Harvard Institute of Economic Research Working Papers 1876, Harvard - Institute of Economic Research.
- Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
- Lazear, Edward P & Rosen, Sherwin, 1981.
"Rank-Order Tournaments as Optimum Labor Contracts,"
Journal of Political Economy,
University of Chicago Press, vol. 89(5), pages 841-64, October.
- Morita, Hodaka, 2001. "Choice of Technology and Labour Market Consequences: An Explanation of U.S.-Japanese Differences," Economic Journal, Royal Economic Society, vol. 111(468), pages 29-50, January.
- Carmichael, H.L. & Macleod, W.B., 1991.
"Multiskilling, Technical Change And The Japanese Firm,"
Cahiers de recherche
9112, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Carmichael, H Lorne & MacLeod, W Bentley, 1993. "Multiskilling, Technical Change and the Japanese Firm," Economic Journal, Royal Economic Society, vol. 103(416), pages 142-60, January.
- Carmichael, H.L. & Macleod, W.B., 1991. "Multiskilling, Technical Change and the Japanese Firm," Cahiers de recherche 9112, Universite de Montreal, Departement de sciences economiques.
- Waldman, Michael, 1984. "Worker Allocation, Hierarchies and the Wage Distribution," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 95-109, January.
- Acemoglu, D. & Pischki, J.S., 1996.
"Why Do Firms Train? Theory and Evidence,"
96-7, Massachusetts Institute of Technology (MIT), Department of Economics.
- Daron Acemoglu & Jorn-Steffen Pischke, 1996. "Why Do Firms Train? Theory and Evidence," NBER Working Papers 5605, National Bureau of Economic Research, Inc.
- Acemoglu, Daron & Pischke, Jörn-Steffen, 1996. "Why do Firms Train? Theory and Evidence," CEPR Discussion Papers 1460, C.E.P.R. Discussion Papers.
- Dasgupta, Partha & Maskin, Eric, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, II: Applications," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 27-41, January.
- Paul Osterman, 1994. "How common is workplace transformation and who adopts it?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(2), pages 173-188, January.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
- Chun Chang & Wang, Yijiang, 1995. "A framework for understanding differences in labor turnover and human capital investment," Journal of Economic Behavior & Organization, Elsevier, vol. 28(1), pages 91-105, September.
- Chong-En Bai & Yijiang Wang, 2003. "Uncertainty in Labor Productivity and Specific Human Capital Investment," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 651-676, July.
When requesting a correction, please mention this item's handle: RePEc:hrr:papers:0402. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mary Helen Walker)
If references are entirely missing, you can add them using this form.