We develop a general equilibrium model of a small open economy with performance-pay worker compensation and occupational choice. We analytically and numerically examine the distributional effects of entrepreneurial talent and performance-pay contracts. Risk-neutral, more talented individuals...

In this paper, we construct a North-South general equilibrium model of offshoring, highlighting the nexus among endogenous effort-based labor productivity and the structure of wages. Offshoring is modeled as international transfer of management practices and production techniques that allow...