Should principals explain and justify their evaluations? In this paper the principal’s evaluation is private information, but she can provide some justifications by sending a costly message. Indeed, it is optimal for the principal to explain her evaluation to the agent if and only if the evaluation turns out to be bad. The justification guarantees the agent that the principal has not distorted ...

Treating Equals Unequally: Incentives in Teams, Workers’ Motivation and Production Technology The importance of fair and equal treatment of workers is at the heart of the debate in organizational management. In this regard, we study how reward mechanisms and production technologies affect effort provision in teams. Our experimental results demonstrate that unequal rewards can potentially increa...

The (Unexpected) Structure of “Rents” on the French and British Labour Markets This paper considers the allocation of labour on the French and British markets, using objective wage and subjective satisfaction data. We show that, in some sectors, workers enjoy both higher wages and higher job satisfaction. We argue that this reflects labour market wage rents. Perhaps surprisingly, wage rents are...

We construct an equilibrium random matching model of the labour market, with endogenous market participation and a general matching technology that allows for market size effects: the job-finding rate for workers and the incentives for participation change with the level of unemployment. In comparison to standard models with constant returns to scale in matching, agent behaviour is more complex...

Shimer (2005) argues that, in a reasonably calibrated Mortensen and Pissarides matching model, shocks to average labor productivity can account for only a small portion of the ‡uctuations in unemployment and vacancies. In this paper, I argue that, if vintage speci…c shocks rather than aggregate productivity shocks are the driving force of ‡uctuations, the model does a better job to account for ...

Becoming an Entrepreneur Using the 1996-2001 Chilean CASEN Panel Survey, this paper analyzes the impact on income of the switch from salaried employment to entrepreneurship (self-employment and leadership of micro-enterprises). By means of a difference-in-differences non-parametric matching estimator the paper alleviates problems of selection bias (on observable and unobservable traits) and cre...

Politico-Economic Causes of Labor Regulation in the United States: Rent Seeking, Alliances, Raising Rivals’ Costs (Even Lowering One’s Own?), and Interjurisdictional Competition This paper offers an eclectic survey of the political economy of labor regulation in the United States at federal and state levels along the dimensions of occupational health and safety, unjust dismissal, right-to-work,...

Gibbons (1998) identifies a tradeoff between up-or-stay and up-or-out promotion rules. Upor-stay never wastes skills of those not promoted but may provide insufficient incentives to invest in skills. Up-or-out on the other hand can always induce investment in skill acquisition but may waste the skills of those not promoted. This paper reports about an experiment designed to study this tradeoff....

We estimate the effect of initial episodes under fixed-term contracts (FTCs) on job duration in the further course of the employment spell, using data from the German Socio-Economic Panel (SOEP) from 1985 to 2002. Using a statistical matching approach, we find that job exit rates are initially much higher if the employment spell began with an FTC. However, exit rates fall below those of compara...

This paper studies kinship band networks as capital market institutions. It explores two of the channels through which membership in a community where individuals are genealogically linked, such as a kinship group, can a¤ect their access to informal credit. The ...rst is that incentives to default are lower for community members who can expect retaliation to fall on their o¤spring as well as on...