Minimum wages and excessive effort supply

Matthias Kräkel and Anja Schöttner

Economics Letters, 2010, vol. 108, issue 3, 341-344

Abstract: It is well-known that, in static models, minimum wages generate positive worker rents and, consequently, inefficiently low effort. We show that this result does not necessarily extend to a dynamic context. The reason is that, in repeated employment relationships, firms may exploit workers' future rents to induce excessively high effort.

Keywords: Bonuses; Limited; liability; Minimum; wages (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Minimum Wages and Excessive Effort Supply (2009)
Working Paper: Minimum Wages and Excessive Effort Supply (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:108:y:2010:i:3:p:341-344

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