Intrinsic Motivation in the Labor Market: Not Too Much, Thank You

Francesca Barigozzi and Nadia Burani ()
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Nadia Burani: Associazione Italiana per la Cultura della Cooperazione e del Non Profit, Postal: P.le della Vittoria, 15, 47121 Forlì, http://www.aiccon.it

No 124-2013, AICCON Working Papers from Associazione Italiana per la Cultura della Cooperazione e del Non Profit

Abstract: We study the screening problem of a firm that needs to hire a worker to produce output and that observes neither the productive ability nor the intrinsic motivation of the worker applying for the job. We completely characterize the set of optimal contracts and we show that it is always in the firm’s interest to hire all types of worker, even the worst ones, and to offer different contracts to different types of employees. Interestingly, the highest social welfare attains when motivation is high but not so much as to become more significant than productive ability. Moreover, when motivation is very high, incentives force the firm to offer a strictly positive wage to workers who derive a positive utility from effort exertion and who become paid volunteers. These results prove that very high motivation is not a desirable workers’ characteristic.

Keywords: adverse selection; multidimensional screening; intrinsic motivation; skills (search for similar items in EconPapers)
JEL-codes: D82 D86 J31 M55 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2013-03-27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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