External recruitment as an incentive device

• 成果类型: Article
• 署名作者: Chen, KP
• 署名单位: Academia Sinica - Taiwan; National Taiwan University
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/428024
• 发表日期: 2005
• 页码: 259-277
• 关键词: tournaments; ECONOMICS; promotion; firm

摘要

External recruitment is often believed to be harmful in that it trades off the need for outside talents with the incentives of inside workers. This article shows that, even from an incentive viewpoint, external recruitment has its powerful function. Specifically, if promotion is based on relative performance, then negative activities (sabotages) are a valuable instrument for competition. This results in inefficiency of the firm. External recruitment, by reducing the marginal return of negative effort relative to that of productive effort, restores the incentives in productive activity. Even without sabotage concern, external recruitment can avoid shirking equilibrium or prevent workers' collusion.