Distribution,efficiency and incentives in organizations

This paper formulates incentives for individual workers in competitive firms in general equilibrium. Piece-rates and rewards for relative performance can elicit efficient effort in equilibrium, but workers benefit from collusion to reduce effort and consumption and expropriate capitalists by lowering the rental, while employers may choose equilibria with excessive ‘effort’. When there is uncertainty about true individual effort, prizes and limited penalties for best and worst performance can support efficient solutions, while income-risk declines as the size of the team grows. If penalties are prohibited, ex post inequality is multiplied and welfare declines.     

Entrepreneurship,Small and Medium-Sized Enterprises and the Macroeconomy. Edited by Z. Acs,B. Carlsson and C. Karlsson

Small Business Economics -     

High Technology Employment,Wages And University R&D Spillovers: Evidence From Us Cities

Using 4 years of data from 36 American cities and 6 high technology groupings we present thc first estimates of University R&D spillover effects on ctnployrnent at this level of disag-gregation, while controlling for wages, prior innovations, state fixed efrccts, and saniple selectivity hias. We find robust evidence that lagged and disaggrcgated university R&D is a significant determinant of city high technology employment and some evidence for employment effects of innovation.     

On optimal unemployment

Some unemployment may be optimal in all states of nature for certain production and utility parameters and firm-provided insurance. For other specifications, uniformly varying hours for all workers is optimal.