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High Compensation Creates a Ratchet Effect

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dc.creator Glazer, Amihai
dc.creator Gersbach, Hans
dc.date 2004
dc.date.accessioned 2013-10-16T07:10:18Z
dc.date.available 2013-10-16T07:10:18Z
dc.date.issued 2013-10-16
dc.identifier http://hdl.handle.net/10419/20380
dc.identifier ppn:386980365
dc.identifier.uri http://koha.mediu.edu.my:8181/xmlui/handle/10419/20380
dc.description 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 than the employer prefers. The incentive contracts firms offer may therefore cap the worker?s earnings. Lastly, this wealth ratchet effect can induce excessive firing and turnover.
dc.language eng
dc.publisher
dc.relation IZA Discussion paper series 1143
dc.rights http://www.econstor.eu/dspace/Nutzungsbedingungen
dc.subject J60
dc.subject J30
dc.subject D80
dc.subject ddc:330
dc.subject principal-agent
dc.subject compensation
dc.subject moral hazard
dc.subject wealth effects
dc.subject Ratchet effects
dc.subject high-powered incentives
dc.subject Vergütungssystem
dc.subject Anreizvertrag
dc.subject Leistungsmotivation
dc.subject Vermögenseffekt
dc.subject Arbeitsmobilität
dc.subject Agency Theory
dc.subject Theorie
dc.title High Compensation Creates a Ratchet Effect
dc.type doc-type:workingPaper


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