Incentives, wages, employment, and the division of labor in teams

• 成果类型: Article
• 署名作者: Rauh, Michael T.
• 署名单位: Indiana University System; Indiana University Bloomington
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12061
• 发表日期: 2014
• 页码: 533-552
• 关键词: Moral hazard; size; performance; provision; CONTRACTS; COSTS; pay

摘要

We develop a theory of incentives, wages, and employment in the context of team production. A central insight is that specialization and division of labor not only improve productivity but also increase effort and the sensitivity of effort to incentives under moral hazard. We show that employment and incentives are complements for the principal when the positive effects of specialization and division of labor outweigh the increase in risk associated with additional employment and are substitutes otherwise. We provide new characterizations of the partnership, the firm, and the role of the budget-breaker that are quite different from the classical literature.