Following recent empirical evidence which indicates the importance of rank for the determination of workers' wellbeing, this paper introduces status seeking preferences in the form of rank-dependent utility functions into a moral hazard framework with one firm and multiple workers, but no correlation in production. Workers' concern for the rank of their wage in the firm's wage distribution may induce the firm to offer discriminatory wage contracts when its aim is to induce all workers to expend effort. * Thanks to
The existence of working-time accounts played an important role in overcoming the negative effects of the Great Recession in Germany. The authors’ analysis of data on establishments with a works council and at least 20 employees from the WSI Works Council Survey shows that the presence and influence of trade unions and the direct impact of the economic crisis are factors that increased the probability of reducing time credits, or building up time deficits on working-time accounts, to safeguard employment. Individual characteristics, such as the proportion of female workers or the proportion of highly qualified employees, had a negative impact on the ability to use working-time accounts. No significant differences were found between the general use of working-time accounts and their use in consequence of the economic crisis. This could be an indication that working-time accounts need to be well established in order to be useful for safeguarding jobs during an economic crisis.
Germany and the United States pursued different economic strategies to minimise the impact of the Coronavirus Crisis on the labour market. Germany focused on safeguarding existing jobs through the use of internal flexibility measures, especially short-time work (STW). The United States relied on a mix of external flexibility and income protection. On this basis, we use macroeconomic time series to examine the German strategy of securing employment through internal flexibility by contrasting it with the chosen strategy in the United States. In Germany, temporary cyclical reductions in working hours are mainly driven via STW. US unemployment rose at an unprecedented rate, but unlike in previous recessions, it was mostly driven by temporary layoffs. However, a closer look at the blind spots of the chosen strategies in both countries showed that despite the different approaches, people in weaker labour market positions were less well protected by the chosen strategies.
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