A note on wage differentials, fixed-wages and adverse selection

Fixed‐wages, Wage Differentials and Worker Heterogeneities

“…The idea is that there are other dimensions or characteristics than ability which affect the value of the contract to the workers. The improvement of the present paper with respect to Carlier and Gaumont (2002) is twofold. On the one hand, we allow agents to consume at both periods, whereas in Carlier and Gaumont (2002) consumption was only taking place at the second period.…”

“…The improvement of the present paper with respect to Carlier and Gaumont (2002) is twofold. On the one hand, we allow agents to consume at both periods, whereas in Carlier and Gaumont (2002) consumption was only taking place at the second period. On the other hand, we extend our analysis to a third adverse selection dimension, namely preference for leisure.…”

“…The adverse selection litterature is also capable of explaining these phenomena. Carlier and Gaumont (2002) have introduced (in addition to productivity) time preference as a second parameter of adverse selection. Workers of different productivity appear to accept contracts that, rather than reflecting their differences, pool those differences to some degree.…”