How to Sell Jobs
33 Pages Posted: 26 Dec 2017 Last revised: 4 May 2018
Date Written: April 26, 2018
If employees have preferences over job attributes, firms have to decide how to sell those attributes to employees. We show that the optimal mechanism for selling jobs with desirable attributes is to assign young employees to low-quality job positions and then promote a subset of them to the desirable jobs. In contrast to the traditional compensating differentials framework, job desirability and wages are positively related in equilibrium. Our analysis provides a framework for thinking about a number of phenomena, such as the span of control, inequality within and between generations, and the effect of competition on employment and wages.
Keywords: Job Design, Compensating Differentials, Employment Contracts, Span of Control
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