Incentives and Promotion in Wage Hierarchies

Francesc Dilme
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Francesc Dilme: Universitat de Barcelona

No 185, Working Papers in Economics from Universitat de Barcelona. Espai de Recerca en Economia

Abstract: Most of the large firms organization schemes consist in hierarchical structures of tiers with different wage levels. Traditionally the existence of this kind of organizations has been associated to the separation of productive and managerial or supervision tasks and to differences in the skills of the workers. However, many firms now employ workers with similar skills, and then the hierarchical structure can be related to an incentive scheme to ensure that workers supply effort. The model we present investigates how firm owners should determine the optimal wage distribution in order to maximize profits.

JEL-codes: J31 L23 M11 M51 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2007
New Economics Papers: this item is included in nep-bec and nep-lab
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