Optimal Contracts with Randomly Arriving Tasks

Daniel Bird and Alexander Frug

No 1147, Working Papers from Barcelona School of Economics

Abstract: Workers rarely perform exactly the same tasks every day. Instead, their daily workload may change randomly over time to comply with the fluctuating needs of the organization where they are employed. In this paper, we show that this typical randomness in workplaces has a striking effect on the structure of long-term employment contracts. In particular, simple intertemporal variability in the worker's tasks is sufficient to generate a rich promotion-based dynamics in which, occasionally, the worker receives a (permanent) wage raise and his future work requirements are reduced.

Keywords: dynamic contracting; seniority; random tasks; promotion (search for similar items in EconPapers)
JEL-codes: D86 M51 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-cta, nep-hrm and nep-mic
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Related works:
Journal Article: Optimal Contracts with Randomly Arriving Tasks (2021)
Working Paper: Optimal contracts with randomly arriving tasks (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1147

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