Interdependent Preferences and the Competitive Wage Structure

Robert Frank ()

RAND Journal of Economics, 1984, vol. 15, issue 4, 510-520

Abstract: This article shows by example that when workers care about relative income and are free to choose their coworkers, the equilibrium distribution of wages within firms must be less dispersed than the corresponding distribution of marginal products. An implicit market for within-firm status is shown to produce welfare gains by sorting workers among firms in accordance with how much they are willing to pay for high rank. The resulting equilibrium Pareto dominates allocations in which each worker is paid his marginal product.

Date: 1984
References: Add references at CitEc
Citations: View citations in EconPapers (89)

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819842 ... O%3B2-Q&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

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:rje:randje:v:15:y:1984:i:winter:p:510-520

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().