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Effort Elicitation, Wage Differentials and Income Distribution in A Wage‐Led Growth Regime
Author(s) -
Jair da Silveira Jaylson,
Tadeu Lima Gilberto
Publication year - 2016
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12090
Subject(s) - economics , wage , labour economics , distribution (mathematics) , productivity , wage share , efficiency wage , wage growth , differential (mechanical device) , intuition , compensating differential , macroeconomics , mathematical analysis , philosophy , mathematics , epistemology , aerospace engineering , engineering
Motivated by the empirical evidence on endogenous labor effort and wage differentials, this paper explores implications for distribution and growth of firms using different strategies to elicit effort from workers. The frequency distribution of effort‐elicitation strategies across firms is governed by a replicator dynamic that generates wage differential as a long‐run equilibrium. Although firms willing to elicit more effort have to compensate workers with a higher wage rate, a larger proportion of firms adopting such strategy will not necessarily produce a higher wage share and thereby a higher growth rate. The intuition is that, depending on the accompanying rise in labor productivity, the wage share may not vary positively with the proportion of firms paying higher wages.