New Organizational Forms, Learning and Incentive-Based Inequality

This paper analyses the influence of organisational change on the widening of earnings inequality, depending on the nature of employers' policy with respect to both how to deal with moral hazard problems and how to manage the access to skills. In a linear agency model which explains organisational change from an incentive perspective, we show that new job design is inequality increasing. However, the extent of inequality depends on the principal's strategy for managing the access to the higher skills required by organisational change: selective hiring vs. in-house training. Training reveals to be another incentive device added to monetary schemes or delegation. By comparison with\ the selective hiring strategy, training entails a lower average wage and a lower expected wage gap between- and within- skill groups.