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Adverse Selection when Jobs are Hard to Do
Author(s) -
Sampson Anthony A.,
Simmons Robert
Publication year - 2000
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/1467-9485.00165
Subject(s) - workforce , economics , distortion (music) , wage , adverse selection , quality (philosophy) , selection (genetic algorithm) , relation (database) , work (physics) , race (biology) , microeconomics , labour economics , econometrics , computer science , artificial intelligence , engineering , sociology , mechanical engineering , computer network , amplifier , philosophy , bandwidth (computing) , epistemology , database , economic growth , gender studies
Privately observed ability increases output and reduces effort required to complete tasks, in a model where harder tasks produce more output. The relation between average quality of the workforce and the wage rate is ambiguous. The model also produces a rat‐race, in the sense that some individuals work harder than is socially optimal. This distortion can be corrected by a non‐linear tax.