The size-wage effect is well documented in the empirical literature, and typical attempts of explanation center on the supply side, using variations of the human capital approach, perhaps combined with institutional theories. With conclusive evidence of its source yet to emerge, an alternative...

This paper considers the opitmal incentives for motivating a risk neutral, wealth constrained agent. In particular, monitoring and pay are shown to be complementary instruments under very general conditions, extending earlier results by Allgulin and Ellingsen (1998). The paper also proves that...

Within most organizations, agents may spend time on a variety of tasks, productive and redistributive. In this paper, I derive an optimal multi-task incentive scheme under the realistic assumption that agents have limited liability. The wage level is shown to increase with an agent's discretion...

Why do some vacancies offer a posted wage whereas others offer a negotiable wage? The paper endogenizes the choice of wage policy in a search model with heterogeneous workers. In particular, we characterize the circumstances under which there exist an equilibrium where all firms negotiate wages....

The shirking model of efficiency wages has been thought to imply that monitoring and pay are substitute instruments for motivating workers. We demonstrate that this result hinges critically on restrictive assumptions regarding workers' choice of effort - for example that there are only two...

If efficiency wages really exist, as proposed by Shapiro and Stiglitz (1984), why do we not see more job purchases? A conventional answer is that with multiple periods, low pay in initial periods serves as an implicit payment (Lazear (1981)). This paper presents a formal analysis of this issue....

In this paper we develop a life cycle model of labor supply and retirement to study the interactions between health and the labor supply behavior of older workers, in particular disability insurance and pension claiming. In our framework, individuals choose when to stop working and, given...

This paper analyzes optimal insurance against unemployment and disability in a private information economy with endogenous health and search effort. Individuals can reduce the probability of becoming disabled by exerting, so-called, prevention effort, which is costly in terms of utility. A...