Wage Floors, Imperfect Performance Measures, and Optimal Job Design

Anja Schöttner and Jenny Kragl

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: We analyze the effects of wage floors on optimal job design in a moral-hazard model with asymmetric tasks and imperfect aggregate performance measurement. Due to cost advantages of specialization, assigning the tasks to different agents is efficient. A sufficiently high wage floor, however, induces the principal to dismiss one agent or to even exclude tasks from the production process. Imperfect performance measurement always lowers profit under multitasking, but may increase profit under specialization. We further show that variations in the wage floor and the agents' reservation utility have significantly different effects on welfare and optimal job design.

JEL-codes: M51 M52 M54 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cta and nep-hrm
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: WAGE FLOORS, IMPERFECT PERFORMANCE MEASURES, AND OPTIMAL JOB DESIGN (2014)
Working Paper: Wage Floors, Imperfect Performance Measures, and Optimal Job Design (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79941

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