Managerial Delegation and Wage Inequality

Jiancai Pi and Shuning Li ()
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Shuning Li: Department of Economics, Nanjing University

Annals of Economics and Finance, 2022, vol. 23, issue 1, 141-157

Abstract: This paper analyzes how managerial delegation affects skilled-unskilled wage inequality. In the basic model with full employment, we find that an increase (resp., a decrease) in the strength of the profit incentive in managerial del- egation will decrease (resp., increase) skilled-unskilled wage inequality. In the extended model with unemployment, we find that a stronger strength of the profit incentive in managerial delegation will narrow down (resp., widen) skilled-unskilled wage inequality if the substitution elasticity between unskilled labor and capital is small enough (resp., sufficiently large). Our conclusions also hold under different risk aversion utility functions.

Keywords: Managerial delegation; Skilled-unskilled wage inequality; General equilibrium approach (search for similar items in EconPapers)
JEL-codes: D21 J31 L21 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2022:v:23:i:1:pili

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