Optimal incentive mix of performance pay and efficiency wage

Arbeitspapier

Firms use a rich set of incentives including fixed wages, bonuses, threat of firing and promise of promotion. Yet, we do not have a theoretical understanding of how such a mix of incentives can arise. This paper aims to build a theoretical model which describes the incentive mix as the solution to an optimal contracting problem and provides broader testable implications. The basic model has a principal-agent relationship with unobservable effort. The integrative model includes the basic model and three building blocks: job-assignment, learning and human capital. The derived incentive mix is a consequence of the dual role of firing. It is both an incentive and a sorting decive. The model's predictions are tested on firm-level data from a large pharmaceutical company. The broader testable implications beyond the incentive mix are also confirmed by the data.

Angaben zum Objekt

• Sprache: Englisch
• ISBN: 9639588199

Verweise und Beziehungen

• Erschienen in: Series: IEHAS Discussion Papers ; No. MT-DP - 2004/18

Klassifikation und Themen

• Klassifikation: Wirtschaft
• Thema: Leistungsentgelt ; Effizienzlohn ; Leistungsanreiz ; Leistungsanreiz ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Frederiksen, Anders ; Takáts, Előd
• Ereignis: Veröffentlichung
• (wer): Hungarian Academy of Sciences, Institute of Economics
• (wo): Budapest
• (wann): 2004

Weitere Informationen

• Handle: http://hdl.handle.net/10419/108094
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ