This paper formalizes the use of flexible labour contracts in an efficiency wage framework, and derives market dualism as an endogenous outcome. By allowing temporary contracts to be either renewed or converted into permanent contracts, we obtain new theoretical insights into the market equilibrium. The conversion rate is itself an incentive device that acts as a substitute for the wage, and firms pay a wage differential in favour of permanent workers. The model also predicts that even if firms hire exclusively under flexible contracts, dualism arises as a feature internal to each firm and, consequently, as a market property.

Wage Incentive Profiles in Dual Labour Markets

DI CINTIO, Marco;GRASSI, EMANUELE
2015

Abstract

This paper formalizes the use of flexible labour contracts in an efficiency wage framework, and derives market dualism as an endogenous outcome. By allowing temporary contracts to be either renewed or converted into permanent contracts, we obtain new theoretical insights into the market equilibrium. The conversion rate is itself an incentive device that acts as a substitute for the wage, and firms pay a wage differential in favour of permanent workers. The model also predicts that even if firms hire exclusively under flexible contracts, dualism arises as a feature internal to each firm and, consequently, as a market property.
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11587/405912
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 4
  • ???jsp.display-item.citation.isi??? 3
social impact