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Intrinsic Motivation in the Labor Market: Not Too Much, Thank You

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  • Barigozzi, Francesca

    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Burani, Nadia

    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

Abstract

We study the screening problem of a firm that needs to hire a worker to produce output and that observes neither the productive ability nor the intrinsic motivation of the worker applying for the job. We completely characterize the set of optimal contracts and we show that it is always in the firm’s interest to hire all types of worker, even the worst ones, and to offer different contracts to different types of employees. Interestingly, the highest social welfare attains when motivation is high but not so much as to become more significant than productive ability. Moreover, when motivation is very high, incentives force the firm to offer a strictly positive wage to workers who derive a positive utility from effort exertion and who become paid volunteers. These results prove that very high motivation is not a desirable workers’ characteristic.

Suggested Citation

  • Barigozzi, Francesca & Burani, Nadia, 2013. "Intrinsic Motivation in the Labor Market: Not Too Much, Thank You," AICCON Working Papers 124-2013, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    • Handle: RePEc:ris:aiccon:2013_124
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    References listed on IDEAS

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    Cited by:

    1. Barigozzi, Francesca & Raggi, Davide, 2013. "The Lemons Problem in a Labor Market with Intrinsic Motivation," AICCON Working Papers 123-2013, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    2. F. Barigozzi & N. Burani & D. Raggi, 2013. "The Lemons Problem in a Labor Market with Intrinsic Motivation. When Higher Salaries Pay Worse Workers," Working Papers wp883, Dipartimento Scienze Economiche, Universita' di Bologna.

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    More about this item

    Keywords

    adverse selection; multidimensional screening; intrinsic motivation; skills;
    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
    • 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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