When workers' intrinsic motivation matters, a wage increase has mixed consequences on applicants' productivity and motivation, as shown in public service, healthcare, education and politics. In a simple theoretical framework where ability and motivation are workers' private information, we rationalize these differentiated responses and identify intuitive conditions for higher wages inducing self-selection of more (or less) productive and motivated workers. The selection patterns depend both on the statistical association between workers' characteristics and on the difference between the incentivised returns to ability across sectors. We emphasize a crowding-out effect of wage on workers' productivity that has not been analyzed in the theoretical literature before.

Productivity Crowding-out in Labor Markets with Motivated Workers

Francesca Barigozzi
;
Nadia Burani;Davide raggi
2018

Abstract

When workers' intrinsic motivation matters, a wage increase has mixed consequences on applicants' productivity and motivation, as shown in public service, healthcare, education and politics. In a simple theoretical framework where ability and motivation are workers' private information, we rationalize these differentiated responses and identify intuitive conditions for higher wages inducing self-selection of more (or less) productive and motivated workers. The selection patterns depend both on the statistical association between workers' characteristics and on the difference between the incentivised returns to ability across sectors. We emphasize a crowding-out effect of wage on workers' productivity that has not been analyzed in the theoretical literature before.
Francesca Barigozzi, Nadia Burani, Davide raggi
File in questo prodotto:
File Dimensione Formato  
Postprint Barigozzi_Burani_Raggi.pdf

embargo fino al 05/04/2021

Tipo: Postprint
Licenza: Licenza per Accesso Aperto. Creative Commons Attribuzione - Non commerciale - Non opere derivate (CCBYNCND)
Dimensione 510.66 kB
Formato Adobe PDF
510.66 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11585/635126
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 8
  • ???jsp.display-item.citation.isi??? 7
social impact