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on Human Capital and Human Resource Management |
| By: | Krishna Dasaratha; Benjamin Golub; Anant Shah |
| Abstract: | A principal uses payments conditioned on stochastic outcomes of a team project to elicit costly effort from the team members. We develop a multi-agent generalization of a classic first-order approach to contract optimization by leveraging methods from network games. The main results characterize the optimal allocation of incentive pay across agents and outcomes. Incentive optimality requires equalizing, across agents, a product of (i) individual productivity (ii) organizational centrality and (iii) responsiveness to monetary incentives. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.08026 |
| By: | Häfner, Samuel (University of St. Gallen); Haeusle, Niklas (University of Leipzig); Koeniger, Winfried (University of St. Gallen); Braun, Alexander (University of St. Gallen) |
| Abstract: | We develop a model in which large risk-neutral firms and individual risk-averse consumers compete to employ heterogeneous workers by posting compensation menus. Production takes time, and we analyze how screening motives interact with the desire to smooth consumption. There is a unique symmetric separating equilibrium that is also efficient. In equilibrium, the extent to which the compensation scheme delays payment until the production quality becomes known depends on whether, and to which extent, the consumers are financially constrained. We discuss how our model relates to the design of compensation schemes in current online peer-to-peer markets. |
| Keywords: | adverse selection, self selection, peer-to-peer markets, labor markets, capital market imperfections |
| JEL: | D15 D82 D86 E24 J33 M52 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17449 |
| By: | Bosworth, Steven J. (University of Reading); Della Giusta, Marina (University of Turin) |
| Abstract: | What explains the persistent under-representation of women at the top organizations within high status occupations? The phenomenon has been documented across countries and neither the closing and reversal of education gaps nor family policies appear effective in closing the gaps. We offer an explanation for the persistence of under-representation based on the mutually reinforcing dynamics resulting from returns to organizational prestige at top organizations (The Matthew Effect) and gender stereotypes in hiring arising from the imperfectly observable ability of workers (The Larry Effect). Our model predicts that when organizational prestige is important and complementary to ability in production, fewer women will be found and hired at higher status organizations, there will be a wage premium for both women and men when they move to them but a greater proportion of men will succeed in doing so, regardless of ability. An aggregate level gender wage gap is thus generated from between-organization wage differences and segregation of women and men to lower- and higher-status organizations respectively. We test the predictions of the model in academia where recognized measures of prestige exist and Matthew effects are well documented. We make use of an employer-employee administrative panel comprising the universe of UK academics and find evidence consistent with the model's predictions: persistence of women's under-representation in higher status organizations and a wage premium for moving of about 3 percent for both women and men. |
| Keywords: | prestige, stereotypes, discrimination |
| JEL: | C78 J31 J70 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17460 |