Wage Floors, Imperfect Performance Measures, and Optimal Job Design
We analyze the effects of wage floors on optimal job design in a moral-hazard model with asymmetric tasks and imperfect aggregate performance measurement. Due to cost advantages of specialization, assigning the tasks to different agents is efficient. A sufficiently high wage floor, however, induces the principal to dismiss one agent or to even exclude tasks from the production process. Imperfect performance measurement always lowers profit under multitasking, but may increase profit under specialization. We further show that variations in the wage floor and the agents' reservation utility have significantly different effects on welfare and optimal job design.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.socialpolitik.org/|
More information through EDIRC
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.:
- Amine, Samir & Lages Dos Santos, Pedro, 2011. "The influence of labour market institutions on job complexity," Research in Economics, Elsevier, vol. 65(3), pages 209-220, September.
- Dilip Mookherjee, 1984. "Optimal Incentive Schemes with Many Agents," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 433-446.
- repec:dau:papers:123456789/6986 is not listed on IDEAS
- Portugal, Pedro & Cardoso, Ana Rute, 2002.
"Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations,"
IZA Discussion Papers
544, Institute for the Study of Labor (IZA).
- Pedro Portugal & Ana Rute Cardoso, 2006. "Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 988-1013, 09.
- Itoh, Hideshi, 1994. "Job design, delegation and cooperation: A principal-agent analysis," European Economic Review, Elsevier, vol. 38(3-4), pages 691-700, April.
- Schnedler, Wendelin, 2010.
"Hidden Action, Identification, and Organization Design,"
0505, University of Heidelberg, Department of Economics.
- Schnedler, Wendelin, 2010. "Hidden Action, Identification, and Organization Design," IZA Discussion Papers 5325, Institute for the Study of Labor (IZA).
- Wendelin Schnedler, 2010. "Hidden action, identification and organisation design," The Centre for Market and Public Organisation 10/250, Department of Economics, University of Bristol, UK.
- Tracy R. Lewis & David E. M. Sappington, 2001. "Optimal Contracting with Private Knowledge of Wealth and Ability," Review of Economic Studies, Oxford University Press, vol. 68(1), pages 21-44.
- Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
- George Baker, 2002. "Distortion and Risk in Optimal Incentive Contracts," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 728-751.
- Neumark, David & Wascher, William L., 2007.
"Minimum Wages and Employment,"
Foundations and Trends(R) in Microeconomics,
now publishers, vol. 3(1–2), pages 1-182, March.
- Sappington, David, 1983. "Limited liability contracts between principal and agent," Journal of Economic Theory, Elsevier, vol. 29(1), pages 1-21, February.
- Itoh, H., 1996.
"Job Design and Incentives in Hierarchies with Team Production,"
ISER Discussion Paper
0403, Institute of Social and Economic Research, Osaka University.
- Itoh, Hideshi, 2001. "Job design and incentives in hierarchies with team production," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 36(1), pages 1-17, January.
- 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.
- Marisa Ratto & Wendelin Schnedler, 2003.
"Too few cooks spoil the broth,"
The Centre for Market and Public Organisation
03/090, Department of Economics, University of Bristol, UK.
- Park, Eun-Soo, 1995. "Incentive Contracting under Limited Liability," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 477-90, Fall.
- Patrick W. Schmitz, 2005.
"Allocating control in agency problems with limited liability and sequential hidden actions,"
Bonn Econ Discussion Papers
bgse27_2005, University of Bonn, Germany.
- Patrick W. Schmitz, 2005. "Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 318-336, Summer.
- Schmitz, Patrick W, 2005. "Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions," CEPR Discussion Papers 5145, C.E.P.R. Discussion Papers.
- Janet Currie & Bruce Fallick, 1993.
"The Minimum Wage and the Employment of Youth: Evidence from the NLSY,"
NBER Working Papers
4348, National Bureau of Economic Research, Inc.
- Janet Currie & Bruce C. Fallick, 1996. "The Minimum Wage and the Employment of Youth Evidence from the NLSY," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428.
- Lewis, Tracy R & Sappington, David E M, 2000. "Contracting with Wealth-Constrained Agents," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(3), pages 743-67, August.
- Ratto Marisa & Schnedler Wendelin, 2008.
"Too Few Cooks Spoil the Broth: Division of Labor and Directed Production,"
The B.E. Journal of Economic Analysis & Policy,
De Gruyter, vol. 8(1), pages 1-19, August.
- Marisa Ratto & Wendelin Schnedler, 2008. "Too Few Cooks Spoil the Broth: Division of Labour and Directed Production," Working Papers 0468, University of Heidelberg, Department of Economics, revised Jul 2008.
- Laux, Christian, 2001. "Limited-Liability and Incentive Contracting with Multiple Projects," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 514-26, Autumn.
- Robert Gibbons, 2005. "Incentives Between Firms (and Within)," Management Science, INFORMS, vol. 51(1), pages 2-17, January.
- Alan Manning, 2010.
"Imperfect Competition in the Labour Market,"
CEP Discussion Papers
dp0981, Centre for Economic Performance, LSE.
- Wendelin Schnedler, 2008. "When Is It Foolish to Reward for A While Benefiting from B?," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 595-619, October.
- Zavodny, Madeline, 2000. "The effect of the minimum wage on employment and hours," Labour Economics, Elsevier, vol. 7(6), pages 729-750, November.
- Jewitt, Ian & Kadan, Ohad & Swinkels, Jeroen M., 2008. "Moral hazard with bounded payments," Journal of Economic Theory, Elsevier, vol. 143(1), pages 59-82, November.
- Demougin, Dominique & Fluet, Claude, 2001. "Monitoring versus incentives," European Economic Review, Elsevier, vol. 45(9), pages 1741-1764, October.
- Anja Schöttner, 2008. "Relational Contracts, Multitasking, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 24(1), pages 138-162, May.
When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc13:79941. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.