Knowledge that Transforms

This article investigates the existence of compensating wage differentials across seasonal and long‐term jobs that arise due to anticipated working time restrictions. Using longitudinal information from the Austrian administrative records, we derive a definition of seasonality based on observed regularities in employment patterns. As wages change across seasonal and long‐term jobs for the same individual over time, we can control for individual‐specific effects and use variation in the starting month of seasonal jobs as an exogenous predictor of anticipated unemployment. We find that employers pay, on average, a positive wage differential of about 11% for seasonal jobs.

We examine how firms can use employee discounts and perks to extract information rents from employees who have private information about their preferences and outside opportunities. The firm creates different bundles of the perk and salary in response to different employee characteristics and marginal costs of the perk. Strategic bundling can lead firms to provide perks even without a cost advantage over the outside market and to deviate from the marginal cost pricing. We characterize how optimal perk provision depends on the set of feasible contracts, on the perk’s marginal cost, and on the perk’s price in the outside market.

A performance measure may or may not reflect the relative importance of different tasks for the production of benefit: it can be aligned or unaligned. Here, I examine when using an aligned measure generates a larger surplus in a principal‐agent relationship than using an unaligned but otherwise identical measure. I find that (i) the agent’s effort costs matter for the optimal way of measuring performance, and (ii) the optimal measure is not aligned but tilted toward tasks that the agent finds easy. Failing to recognize these insights may lead to false predictions about the use of incentives.

This paper explores the determinants of earnings growth in corporate hierarchies using static and dynamic panel data techniques. The novelty derives from the distinction between base pay and bonus, the asymmetric effects of promotion and demotion, and the consideration of dynamic effects. We find that the convexity of pay structures is robust to the allowance for unobserved individual heterogeneity. Demotion has a stronger effect on compensation growth in absolute value than promotion. Dynamic models indicate that the causal effect of past promotion is positive on the growth in base and total pay but has no significant effect on bonus growth.

A structural empirical job search model is presented that incorporates the labor supply decision of individuals. The arrival of a job offer is modeled as a random draw from a wage‐hours offer distribution. Subjective information is used on desired working hours to identify optimal hours from offered hours. Policy simulations are performed to address several policy questions: Does a decrease in unemployment benefits lead to the acceptance of jobs with less preferred working hours? How does a decrease in the length of the standard working week affect the job acceptance behavior of the unemployed?

We use British panel data to investigate single women’s labor supply changes in response to three reforms that affected individuals’ work incentives. We use these reforms to identify changes in labor supply. There is evidence of small hours of work effects for two of such reforms. A third reform in 1999 instead led to a significant increase in single mothers’ hours of work. The mechanism by which the labor supply adjustments were made occurred largely through job changes rather than hours changes with the same employer. This is little overall effect of the reforms on wages.