agents in a highly non-linear incentive system, we find that the improvement in productivity far outweighed the costs … accordingly focus more on the productivity-enhancing than on the distortionary effects. …

This paper presents an Agent-Based Model (ABM) that seeks to explain the concordance of sluggish growth of productivity … and of real wages found in macro-economic statistics, and the increased dispersion of firm productivity and worker … and low productivity firms seeking to cut wages. The model highlights the antipodal competitive dynamics between a …