This paper provides a new explanation for the dominance of the low-powered incentive contract over the high-powered incentive contract using a hybrid model of moral hazard and adverse selection. We first show that unobservable risk aversion or cost leads to lowpowered incentives. We then consider the case where both risk aversion and cost of the agent are unobservable to the principal. This mul...

The final third of the twentieth century represents an important episode in Swedish labor market history. Over that period, the pattern of unionization and the wage distribution co-evolved in interesting ways. From 1968-1983 the unionization rate increased sharply in Sweden, and unions gained more power to influence the wage distribution. These years were characterized by “solidarity wage barga...

Several countries are increasingly relying on immigration as a means of coping with domestic shortages of health care professionals. This trend has led to concerns that in many of the source countries - especially within Africa - the outflow of health care professionals is adversely affecting the health care system. This paper examines the role of wages in the migration decision and discusses t...

Rising Wage Inequality, the Decline of Collective Bargaining, and the Gender Wage Gap This paper investigates the increase in wage inequality, the decline in collective bargaining, and the development of the gender wage gap in West Germany between 2001 and 2006. Based on detailed linked employer-employee data, we show that wage inequality is rising strongly – driven not only by real wage increa...

Are centralised systems of wage setting good or bad for economic performance? The theoretical literature gives no clear answer. Multiple factors contribute to good economic performance, and different wage bargaining systems may affect each one of these factors differently. While centralised bargaining might be good for unemployment by restraining unions’ wage demands and creating better incenti...