 Screening workers for ability and motivationFrancesca Barigozzi and Nadia Burani Oxford Economic Papers, 2016, vol. 68, issue 2, 627-650 Abstract: We study the screening problem of a firm that hires workers without knowing their ability or their intrinsic motivation. We completely characterise the set of optimal contracts (consisting of observable effort levels and non-linear salaries) that depend on how workers’ heterogeneity in ability relates to the heterogeneity in motivation. Accordingly, optimal contracts differ as to whether ability or motivation prevails in determining workers’ performance. We show that full separation and full participation of workers’ types is always implemented, when feasible, because it is preferred by the firm to either pooling or excluding some workers. Moreover, when ability prevails, there exist full screening contracts such that motivated workers are asked to provide the efficient level of effort, and such that the firm pays low information rents to its workers. Despite this fact, the firm makes higher profits when motivation rather than ability prevails because of labour donations from motivated workers. Date: 2016 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:68:y:2016:i:2:p:627-650. Ordering information: This journal article can be ordered from Access Statistics for this article Oxford Economic Papers is currently edited by James Forder and Francis J. Teal More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
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