Productivity crowding-out in labor markets with motivated workers

Francesca Barigozzi, Nadia Burani and Davide Raggi

Journal of Economic Behavior & Organization, 2018, vol. 151, issue C, 199-218

Abstract: When workers’ intrinsic motivation matters, a wage increase has mixed consequences on applicants’ productivity and motivation, as shown in public service, healthcare, education and politics. In a simple theoretical framework where ability and motivation are workers’ private information, we rationalize these differentiated responses and identify intuitive conditions for higher wages inducing self-selection of more (or less) productive and motivated workers. The selection patterns depend both on the statistical association between workers’ characteristics and on the difference between the incentivized returns to ability across sectors. We emphasize a crowding-out effect of wage on workers’ productivity that has not been analyzed in the theoretical literature before.

Keywords: Productivity; Motivation; Bidimensional asymmetric information; Adverse vs. propitious selection; Crowding effects (search for similar items in EconPapers)
JEL-codes: D82 J2 J3 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S016726811830091X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:151:y:2018:i:c:p:199-218

DOI: 10.1016/j.jebo.2018.03.018

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().