The Lemons Problem in a Labor Market with Intrinsic Motivation: When Higher Salaries Pay Worse Workers

Barigozzi, Francesca ; Burani, Nadia ; Raggi, Davide (2013) The Lemons Problem in a Labor Market with Intrinsic Motivation: When Higher Salaries Pay Worse Workers. Bologna: Dipartimento di Scienze economiche DSE, p. 40. DOI 10.6092/unibo/amsacta/3837. In: Quaderni - Working Paper DSE (883). ISSN 2282-6483.
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Abstract

We study the Lemons Problem when workers have private information on both their skills and their intrinsic motivation for the job offered by firms in the labor market. We first show that, when workers are motivated, inefficiencies due to adverse selection are mitigated. More interestingly, depending on the association between productivity and motivation, higher salaries affect the pool of candidates in three possible ways: they can attract (i) more skilled but less motivated applicants, as expected; (ii) more skilled and more motivated applicants; (iii) less skilled and less motivated applicants. The last two counterintuitive effects can only occur when a positive correlation exists between productivity and motivation. Our results are relevant in the policy debate on whether it is possible to improve the quality of workers in vocational markets by changing their wage rate and reconcile the different empirical evidence provided so far on motivated workers such as public servants, teachers, health professionals and, politicians.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Barigozzi, Francesca
Burani, Nadia
Raggi, Davide
Keywords
skills, intrinsic motivation, the bidimensional Lemons Problem, labor supply
Subjects
ISSN
2282-6483
DOI
Deposit date
08 Oct 2013 09:09
Last modified
13 Oct 2014 12:33
URI

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