Crifo-Tillet, Patricia: Incentives and Wage Inequality in a Model of Endogenous Growth with Organizational Change
World Conference Econometric Society, 2000, Seattle

Patricia Crifo-Tillet, University Lyon 2
Incentives and Wage Inequality in a Model of Endogenous Growth with Organizational Change
Session: C-5-5  Sunday 13 August 2000  by Crifo-Tillet, Patricia
This paper analyzes the interaction between innovation, organizational change and earnings inequality. Within an endogenous growth framework, organizational change is defined as a multi-tasking structure with moral hazard. The model shows that new job design complementary to innovation is inequality increasing. However, the extent of inequality depends on the nature of training costs associated with multi-tasking: effort vs. wages costs. Effort costs characterizing on-the-job training are more likely to reduce wage inequality between firms, and leave wage differentials within firms unchanged. This model could contribute to explain that some countries like Germany or Japan have witnessed a narrower inequality development during the recent decades by comparison with the United States, German and Japanese firms relying more on continuous training to help employees cope with organizational change.


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