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A note on incentive wages with human capital formation

Muysken Joan and Thomas Zwick ()

No 12, Research Memorandum from Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR)

Abstract: This paper shows that investment inhuman capital may be another reason for incentive wages in addition to "retain, recruit and motivate". It is shown under which circumstances firms pay wages in excess of the market clearing level in order to induce workers to invest. Investment in human capital is inefficient when workers can determine it due to rent sharing and sunk costs.

Keywords: labour economics (search for similar items in EconPapers)
Date: 1996
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