Stabsseminar ved Espen Moen

Espen Moen fra BI holder stabsseminar ved Institutt for foretaksøkonomi fredag 16. februar.

14.02.2001 - Elin F. Styve

Tema er: Does performance pay create unemployment?

Tid og sted:
Fredag 16. februar kl. 1215-1330 i Karl Borchs aud.

Kontaktperson: Hans K. Hvide (9283)

Abstract
We study a labour market in which firms can observe workers' output but not their effort, and in which a worker's productivity in a given firm depends on a worker-firm specific component, un-observable for the firm.
Firms offer wage contracts that optimally trade off effort and wage costs. As a result, employed workers enjoy rents, which in turn create unemployment. We show that the incentive power of the equilibrium wage contract is constrained socially efficient in the absence of unemployment benefits. We then apply the model to explain the recent increase in performance-pay contracts. Within our model, this can be explained by three different factors: (i) increased importance of non-observable effort, (ii) a fall in the marginal tax rate, (iii) a reduction in the heterogeneity of workers performing the same task. The likely effect of all three factors is an increased equilibrium unemployment rate.

Paper kan hentes fra instituttets hjemmeside på Internett: www.nhh.no/for/seminars/2001-spring/160201.pdf.