How to Sell Jobs

35 Pages Posted: 26 Dec 2017 Last revised: 2 Sep 2018

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Radoslawa Nikolowa

Queen Mary, University of London

Date Written: August 31, 2018

Abstract

Abstract We develop a theory of competition in labor markets where firms compete to sell desirable job attributes to employees. We show that when employees perceive desirable job attributes and monetary compensation as complements, the optimal mechanism for selling desirable jobs is to assign young employees to low-quality jobs and then promote only some of them to the desirable jobs. In contrast with the traditional compensating differentials framework, job desirability and wages are positively related in equilibrium. Our analysis provides a framework for thinking about the effect of competition on employment and wages, span of control, and inequality within and between generations.

Keywords: Competition, Compensating Differentials, Employment Contracts

Suggested Citation

Ferreira, Daniel and Nikolowa, Radoslawa, How to Sell Jobs (August 31, 2018). Available at SSRN: https://ssrn.com/abstract=3091006 or http://dx.doi.org/10.2139/ssrn.3091006

Daniel Ferreira (Contact Author)

London School of Economics - Department of Finance ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
(+44) 20 7955 7544 (Phone)

HOME PAGE: http://personal.lse.ac.uk/FERREIRD/

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Radoslawa Nikolowa

Queen Mary, University of London ( email )

Lincoln's Inn Fields
Mile End Rd.
London, E1 4NS
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
50
Abstract Views
280
PlumX