Wages and Productivity Growth in a Dynamic Monopoly* This Paper studies the intertemporal problem of a monopolistic firm that engages in productivity-enhancing innovations to reduce its labour costs. If the level of wages is sufficiently low, the firm’s rate of productivity growth approaches the rate of wage growth and eventually the firm reaches a steady state where its unit labour cost remain...

In a pioneering approach towards the explanation of the phenomenon of “yes man” behavior in organizations, Prendergast (1993) argued that incentive contracts in employment relationships generally make a worker distort his privately acquired information. This would imply that there is a trade-off between inducing a worker to exert costly effort and inducing him to tell the truth. In contrast, we...

The Wage Effects of Social Norms: Evidence of Deviations from Peers’ Body-Mass in Europe We investigate wage effects of deviations from peer group body mass index (BMI) to evaluate the influence of social norms on wages. Our approach allows for disentangling the influence of the social norm from any (anticipated) productivity effects associated with deviations from a clinically recommended BMI....

High Compensation Creates a Ratchet Effect We consider a firm which pays a worker for his effort over several periods. The more the firm pays in one period, the wealthier the worker is in the following periods, and so the more he must be paid for a given effort. This wealth effect can induce an employer to pay little initially and more later on. For related reasons, the worker may work harder t...

In this paper, we study how foreign ownership of Swedish companies affects employment and wages. To study these effects, we specify a model based on the assumption that the Swedish labour market can be described as one where trade unions and employers bargain over employment and wages. Our hypothesis is that bargaining power is affected by institutional settings and the ownership of the firm. T...

We contribute to the literature on effect of taxes locational choices wealthy individuals by examining geographical sensitivity Forbes 400 richest Americans state estate taxes. Though we find billionaires’ effective tax rates are only about half statutory rate, their residential highly sensitive these taxes, as 35 percent local billionaires leave states with an tax. This tax-induced mobility ca...

Parental Education and Wages: Evidence from China Using nationally representative data in China, we find substantial positive partial correlations of both parents’ education with one’s wage. In addition, returns to father’s education are higher in more monopsonistic and less meritocratic labor markets, including non-coastal regions, the state-owned sector, and the early periods of the reform er...

In a pioneering approach towards the explanation of the phenomenon of “yes man” behavior in organizations, Prendergast [American Economic Review 83 (1993) 757–770] argued that incentive contracts in employment relationships generally make a worker distort his privately acquired information. This would imply that there is a trade-off between inducing a worker to exert costly effort and inducing ...

In this paper we study the evolution of the labor share in the OECD since 1970. We show it is essentially related to the capital-output ratio; that this relationship is shifted by factors like the price of imported materials or the skill mix; and that discrepancies between the marginal product of labor and the real wage (due to, e.g., product market power, union bargaining, and labor adjustment...

This paper studies strategic communication by an expert who is concerned about appearing to be well informed. The expert is assumed to observe a private signal with a simple and particularly tractable (“multiplicative linear”) structure. The quality of the expert’s information is evaluated on the basis of the advice given and the realized state of the world. In equilibrium of this reputational ...