Wage, Structure, Turnover and Working Conditions: A Public Finance Perspective

George Warskett () and Stanley Winer ()
Additional contact information
George Warskett: School of Public Adminstration, Carleton University, http://www.carleton.ca/sppa/

No 00-06, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We explore the formation of a wage structure within a competitive firm that provides improved working conditions in order to reduce turnover within its labor force. The competitive firm must raise the funds required to pay for workplace improvements by, in effect, taxing its own employees. A wage structure emerges from the analysis of the firm's problem of paying workers according to (hard to observe) individual skill levels, while reducing each person's wage to provide the funds required to pay for a better working environment. Because of information and administration costs associated with implementing wage differentiation according to skill, costs which act as a wedge betweeen the value of wage reductions and the provision of workplace improvements, employees of similar but different skill levels are grouped into a finite number of wage brackets within which all individuals are paid alike. In this model, the formation of a wage structure is analogous to the sorting of economic activities into tax bases and taxpayers into tax rate bands that is conducted by government in the course of raising tax revenues to provide for public services.

Keywords: Wage structure; Sorting; Quality of working conditions; Turnover; Public Goods (search for similar items in EconPapers)
JEL-codes: H40 J30 J31 (search for similar items in EconPapers)
Date: 2000-05
New Economics Papers: this item is included in nep-lab
References: Add references at CitEc
Citations:

Published: Revised version: Education Vouchers, the Peer Group Problem, and the Question of Dropouts, Southern Economic Journal, Vol. 68, No. 4 (April 2002), pp. 774–793

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:car:carecp:00-06

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Carleton Economic Papers from Carleton University, Department of Economics C870 Loeb Building, 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada.
Bibliographic data for series maintained by Court Lindsay ().