Flatter wage profiles and reduced lifetime employment: A simple formalization

Akiomi Kitagawa, Souichi Ohta, Hiroshi Teruyama

研究成果: Chapter

抄録

This chapter explores the implications of possible bankruptcies of firms for their own wage schemes and the structure of labor market, using a two-period general equilibrium model. The bankruptcy risk flattens a wage profile of each firm, weakening its incentive effect, thereby making room for efficiency wage to be used as a supplementary incentive device. The use of the efficiency wage, in turn, stratifies the labor market into the primary one, in which job rationing is observed, and the secondary one, in which job rationing is not observed. Substantial utility differential emerges between those who have luckily found a job in the primary market and those who have not, although there is no difference in their innate abilities. This differential widens, as bankruptcies become more likely. Moreover, the dual structure of the labor market and the entry decisions of firms render the employment size in the primary market too small to attain a social optimum.

本文言語English
ホスト出版物のタイトルAdvances in Japanese Business and Economics
出版社Springer
ページ37-63
ページ数27
DOI
出版ステータスPublished - 2018 1 1

出版物シリーズ

名前Advances in Japanese Business and Economics
12
ISSN(印刷版)2197-8859
ISSN(電子版)2197-8867

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Economics and Econometrics
  • Finance

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