Occupational choice, incentives and wealth distribution

Alessandro Citanna (citanna@hec.fr) and Archishman Chakraborty
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Alessandro Citanna: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: We consider a model of occupational choice in large economies where individuals differ in their wealth endowment. Individuals can remain self-employed or engage in productive matches with another individual, i.e., form firms. Matches are subject to a moral hazard problem with limited liability. The division of the gains from such matches is determined by competitive forces. When the incentive problem is asymmetric, matches are typically wealth-heterogeneous, with richer individuals choosing the occupation for which incentives are more important. The utilities attained within a match depend on the wealth distribution and changes in the latter give rise to ‘trickle down' effects.

Keywords: Matching; Moral hazard; Wealth distribution (search for similar items in EconPapers)
Date: 2005-06-01
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Citations: View citations in EconPapers (16)

Published in Journal of Economic Theory, 2005, Vol.122,n°2, pp.206-224. ⟨10.1016/j.jet.2003.11.004⟩

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Related works:
Journal Article: Occupational choice, incentives and wealth distribution (2005)
Working Paper: Occupational Choice, incentives and wealth distribution (2001)
Working Paper: Occupational Choice, Incentives and Wealth Distribution (2001)
Working Paper: Occupational Choice, Incentives and Wealth Distribution (1999)
Working Paper: Occupational choice, incentives and wealth distribution
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00463229

DOI: 10.1016/j.jet.2003.11.004

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