Wage incentive profiles in dual labour markets

Emanuele Grassi and Marco Di Cintio

MPRA Paper from University Library of Munich, Germany

Abstract: We propose a modified version of the Shapiro-Stiglitz’s (1984) efficiency wage model by introducing temporary contracts in the standard setup. New theoretical insights emerge on the incentive problem faced by workers and firms. We argue that the existence of temporary contracts broaden the incentive menu available to employers and that the optimal incentive structure can be sustained as an equi- librium outcome only if permanent contracts do not disappear. We also provide an alternative explanation of the wage penalty suffered by temporary workers even if standard models of efficiency wages would predict higher compensations for workers facing a higher job loss risk.

Keywords: Dual labour market; efficiency wages; wage differentials (search for similar items in EconPapers)
JEL-codes: J31 J41 J63 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-bec, nep-cta, nep-iue, nep-lab and nep-lma
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Related works:
Journal Article: Wage Incentive Profiles in Dual Labour Markets (2015)
Working Paper: Wage Incentive Profiles in Dual Labor Markets (2014)
Working Paper: Wage Incentive Profiles in Dual Labor Markets (2014)
Working Paper: Wage incentive profiles in dual labor markets (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:32266

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