In Italy, employees are fully insured against earning losses due to illness. Since worker's health is not easily verifiable, absenteeism due to illness is considered an empirical proxy for employee shirking. The Bank of Italy Household Survey (SHIW) provides individual data on days of absence....

In this paper, we examine the allocation of tasks between a principal and an agent considering their incentives to provide effort, their different abilities in handling tasks, and transmission costs. We focus our attention on two tasks: the first may be handled by the principal or by the agent,...