Abstract
The present paper considers cost-sharing contracts in the presence of firm-specific training and examines the optimal wage profiles in a hierarchical firm. Our analysis shows that (a) a two-part burden on the lower-level employee exists (b) the lower-level employees may cross-subsidize the higher-level employees, leading to inequality in earned income (c) the relative bargaining strengths of the employers and the employees play an important role in determining the wage profiles and the employment structures.
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Ghosh, S. Productivity, Wages and Human Capital. J. Quant. Econ. 1, 147–155 (2003). https://doi.org/10.1007/BF03404655
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DOI: https://doi.org/10.1007/BF03404655