This paper considers why organizations use promotions, rather than just monetary bonuses, to motivate employees even though this may conflict with efficient assignment of employees to jobs. When performance is unverifiable, use of promotion reduces the incentive for managers to be affected by...

This paper considers why organizations use promotions, rather than just monetary bonuses, to motivate employees even though this may conflict with efficient assignment of employees to jobs. When performance is unverifiable, use of promotion reduces the incentive for managers to be affected by...

We reconsider the job design theory of Holmstrom and Milgrom (1991), to include career concerns considerations. When reputations are considered, discretion may play a more integral part of the incentive scheme. It can be a useful instrument to enhance incentives and prevent the adverse selection...

Although a number of different models have been suggested for the process that brings workers and firms together in the labour market, none of these performs well in empirical studies of the aggregate matching function. Empirically, the most successful functional form is Cobb-Douglas, for which...

This paper analyses the contract-posting equilibrium in a general equilibrium matching model of the labour market with on-the-job turnover. Privately optimal contracts have a rising wage-tenure profile, even when productivity is constant. The effect is to reduce equilibrium turnover; when jobs...

The existing literature on training is concerned with understanding the reasons why firms pay for the general skills of their workers, but without explaining which firms train which workers. This paper develops a theory that both explains the willingness of firms to pay for general training, and...

Several papers have argued that firms can hide profits from unions with hard debt commitments. Alternatively, here we argue that unions can manipulate the non-shirking constraint and win higher efficiency wages. By creating a culture of mistrust and an opposition to supervision ex ante, unions...

We construct an equilibrium random matching model of the labour market, with endogenous market participation and a general matching technology that allows for market size effects: the job-finding rate for workers and the incentives for participation change with the level of unemployment. In...

This paper argues that the prevalence of compensation systems which reward winners without explicitly identifying losers can be rationalized by workers` concern for relative payoffs. If the workers` participation constraints are binding, the firm must compensate its employees for the disutility...

Using a database of all published articles in economic journals over the last 30 years, we investigate the determinants of scientific co-authorship. We find that, controlling for pair-wise fixed effects and author productivity, a new collaboration emerges faster if the two authors are more...