Selection Wages: An Illustration

Ekkehart Schlicht ()

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: Offering higher wages may enable firms to attract more applicants and screen them more carefully. If firms compete in this way in the labor market, "selection wages" emerge. This note illustrates this wage-setting mechanism. Selection wages may engender unconventional results, such as a pre-tax wage compression induced by the introduction of a progressive wage tax.

Keywords: wage formation; efficiency wage; incentive wage; mobility; job-specific pay; wage-tax (search for similar items in EconPapers)
JEL-codes: J31 J41 J62 J63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-lab
Date: 2006-12
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