How incentives increase inequality
Labour. Review of Labour Economics and Industrial Relations
2006
20
2
June
383-391
theoretical analysis ; wage differential ; wage incentive
Wages and wage payment systems
English
Bibliogr.
"We determine the optimal level of bonuses in the case of Co-production between an agent and multiusers. There is Co-production when the outcome is the result of both the agent's effort and the user's effort and type. Paying bonuses to the agent encourages him to vary his effort according to the user he meets. This variety in the agent's effort results in an increase in inequality. Hence, the optimal level of bonuses is muted when the principal cares about equality among users. This is typically the case in education or health."
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