Minimum Wages and Excessive Effort Supply

It is well-known that, in static models, minimum wages generate positive worker rents and, consequently, ine?ciently low effort. We show that this result does not necessarily extend to a dynamic context. The reason is that, in repeated employment relationships, ?rms may exploit workers’ future rents to induce excessively high effort.

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Year of publication:	2009-06
Authors:	Kräkel, Matthias ; Schöttner, Anja
Institutions:	University of Bonn, Germany
Subject:	bonuses \| limited liability \| minimum wages

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Extent:	application/pdf
Series:	Bonn Econ Discussion Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	1 pages long
Classification:	D82 - Asymmetric and Private Information ; D86 - Economics of Contract: Theory ; J33 - Compensation Packages; Payment Methods
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004964139