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Signaling and Screening of Workers' Motivation

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  • Josse Delfgaauw

    (Erasmus University Rotterdam)

  • Robert A.J. Dur

    (Erasmus University Rotterdam)

Abstract

This paper develops a model in which workers are heterogeneous in their intrinsic motivation to work at a firm. We characterise optimal incentive schemes and examine how the firm can attract and select highly motivated workers to fill a vacancy when workers’ motivation is private information. While posting a higher wage increases the probability of filling the vacancy, it decreases the expected average quality of job applicants because less motivated workers are induced to apply. The optimal wage scheme entails a trade-off between the probability of filling the vacancy, the rents left to the worker, and the expected worker's motivation. This discussion paper has resulted in a publication in the Journal of Economic Behavior and Organization , 62(4), 605-24.

Suggested Citation

  • Josse Delfgaauw & Robert A.J. Dur, 2002. "Signaling and Screening of Workers' Motivation," Tinbergen Institute Discussion Papers 02-050/3, Tinbergen Institute, revised 04 Mar 2005.
  • Handle: RePEc:tin:wpaper:20020050
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    More about this item

    Keywords

    signaling and screening models; intrinsic motivation; monetary incentive schemes; minimum wages.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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