or responsiveness to financial incentives. In the frontier literature productive efficiency is assumed to be exogenously … with theoretical work on internal theory of the firm, which predicts that productivity compensation schemes will work well … production, as theory has hypothesized. The number of members in a group decreases both the quantity produced and the efficiency …

rigid than pay that is not designed to effect incentives. Some have gone so far as to argue that this may explain … differences in unemployment rates across countries. it is shown that there is no direct link between incentives and wage rigidity …. Many compensation schemes that provide incentives have the reverse effect: That is, they tend to make wages more rigid than …