English, Article, Journal or magazine article edition: Wage Flexibility in Ongoing Employment Relations - An Experiment with a Stochastic Labor Market - Siegfried K. Berninghaus; Sabrina Bleich; Werner Gueth

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Bookmark: http://trove.nla.gov.au/version/994
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Wage Flexibility in Ongoing Employment Relations - An Experiment with a Stochastic Labor Market -
Author
  • Siegfried K. Berninghaus
  • Sabrina Bleich
  • Werner Gueth
Physical Description
  • preprint
Notes
  • Facing a stochastic market wage, which is independent of their own hiring policy, employers offer contracts specifying ï¬xed wage, revenue share and employment duration. In ongoing employment relations it depends on the treatment whether ï¬xed wages can be only increased or also decreased. Will the uncertainty of the future market wage and less wage flexibility lead to temporary employment? And, if not, will employers adjust wages to changing market wages and will workers in ongoing employment relations react to wage decreases via effort choices? Our results partly question empirical claims, e.g. of Bewley (1995), and conï¬rm the tendency to establish ongoing employment relations. Granting more wage flexibility to employers altogether questions rather than enhances effciency since it induces opportunistic wage cuts to which employees react with lower efforts.
  • noncooperative game, labor contracts, labor market flexibility, principal-agent theory, experimental economics
  • RePEc:jrp:jrpwrp:2007-072
Language
  • English
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