How to Sell Jobs

33 Pages Posted: 26 Dec 2017 Last revised: 4 May 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: April 26, 2018

Abstract

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

Suggested Citation

Ferreira, Daniel and Nikolowa, Radoslawa, How to Sell Jobs (April 26, 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 )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Radoslawa Nikolowa

Queen Mary, University of London ( email )

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

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