Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/37039
Authors: 
Kräkel, Matthias
Schöttner, Anja
Year of Publication: 
2009
Series/Report no.: 
Bonn econ discussion papers 2009,8
Abstract: 
It is well-known that, in static models, minimum wages generate positive worker rents and, consequently, inefficiently low effort. We show that this result does not necessarily extend to a dynamic context. The reason is that, in repeated employment relationships, firms may exploit workers future rents to induce excessively high effort.
Subjects: 
bonuses
limited liability
minimum wages
JEL: 
D82
D86
J33
Document Type: 
Working Paper

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