We develop a model that clarifies how to measure CEO incentive strength and how to reconcile the enormous differences in pay sensitivities between executives in large and small firms. The crucial parameter is shown to be the elasticity of CEO productivity with respect to firm size. We find that...

The authors provide theoretical and empirical analyses of an asymmetric-information model of layoffs. When firms have discretion with respect to whom to lay off, the market infers that laid-off workers are of low ability. Assuming that no such negative inference is warranted if workers are...

In previous work, we showed that a model that integrates job assignment, human capital acquisition, and learning can explain several empirical findings concerning wage and promotion dynamics inside firms. In this article, we extend that model in two ways. First, we incorporate schooling and...

We develop a model in which a worker's skills determine the worker's current wage and sector. The market and the worker are initially uncertain about some of the worker's skills. Endogenous wage changes and sector mobility occur as labor market participants learn about these unobserved skills....

This paper uses recent results from incentive theory to study heretofore informal critiques of piece-rate compensation schemes. Th e informal critiques are based on the history of failed attempts to i nstall piece-rate compensation schemes at the turn of the century. Th e formal analysis...