A note on wage differentials, fixed-wages and adverse selection

Using a substitution property of worker’s types (productivity and time preference), we propose an explanation for both fixed-wages and wage differentials. Fixed-wages result in bunching at the optimum. Equally productive workers with different time preference accept different wages.

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Bibliographic Details
Published in:	Economics letters Vol. 77; no. 3; pp. 349 - 356
Main Authors:	Carlier, G., Gaumont, D.
Format:	Journal Article
Language:	English
Published:	Elsevier B.V 01-11-2002 Elsevier
Series:	Economics Letters
Subjects:	Adverse selection Fixed-wages Heterogeneous time preference Labor contracts Wage differentials Fixed-wages Adverse selection J31 Heterogeneous time preference Wage differentials Labor contracts D82
Online Access:	Get full text
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Description
Summary:	Using a substitution property of worker’s types (productivity and time preference), we propose an explanation for both fixed-wages and wage differentials. Fixed-wages result in bunching at the optimum. Equally productive workers with different time preference accept different wages.
ISSN:	0165-1765 1873-7374
DOI:	10.1016/S0165-1765(02)00147-7