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Article Dans Une Revue Journal of Political Economy Année : 2016

Bonus Culture: Competitive Pay, Screening and Multitasking

Résumé

To analyze the impact of labor market competition on the structure of compensation, we embed multitasking and screening within a Hotelling framework. Competition for talent leads to an escalation of performance pay, shifting effort away from long-term investments, risk management, and cooperation. Efficiency losses can exceed those from a single principal, who dulls incentives to extract rents. As competition intensifies, monopsonistic underincentivization of low-skill agents first decreases and then gives way to growing overincentivization of high-skill ones. Aggregate welfare is thus hill-shaped, while inequality tends to rise monotonically. Bonus caps can help restore balance in incentives but may generate other distortions.
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Dates et versions

hal-04527031 , version 1 (29-03-2024)

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Roland Bénabou, Jean Tirole. Bonus Culture: Competitive Pay, Screening and Multitasking. Journal of Political Economy, 2016, 124 (2), pp.305-370. ⟨10.1086/684853⟩. ⟨hal-04527031⟩
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