Moen, Espen R; Rosén, Åsa - C.E.P.R. Discussion Papers - 2003
’s productivity in a given firm depends on a worker-firm specific component, unobservable for the firm. Firms offer wage contracts … unemployment. We show that the socially efficient incentive power of the equilibrium wage contract is constrained in the absence of … unemployment benefits. We then apply the model to explain the recent increase in performance-pay contracts. Within our model, this …