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Date
2009-07-01Type
- Journal Article
ETH Bibliography
yes
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Abstract
Consider a firm which pays a (credit‐constrained) worker for his effort over two periods. The more the firm pays in one period, the wealthier is the worker in the following period, and so the more he must then be paid for a given effort. We describe the profit‐maximising contract under these conditions, showing how this wealth‐ratchet effect can raise wages over time, and cause the firm to fire older workers. Show more
Publication status
publishedExternal links
Journal / series
The Economic JournalVolume
Pages / Article No.
Publisher
BlackwellOrganisational unit
03729 - Gersbach, Hans / Gersbach, Hans
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ETH Bibliography
yes
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