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Occupational Choice, Incentives and Wealth Distribution

Abstract : We consider a model of occupational choice in large economies where individuals differ in their wealth endowment. Individuals can remain self-employed or engage in productive matches with another individual, i.e., form firms. Matches are subject to a moral hazard problem with limited liability. The division of the gains from such matches is determined by competitive forces. When the incentive problem is asymmetric, matches are typically wealth-heterogeneous, with richer individuals choosing the occupation for which incentives are more important. The utilities attained within a match depend on the wealth distribution and changes in the latter give rise to 'trickle down' effects.
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https://hal-hec.archives-ouvertes.fr/hal-00599913
Contributor : Antoine Haldemann Connect in order to contact the contributor
Submitted on : Saturday, June 11, 2011 - 3:32:21 PM
Last modification on : Tuesday, August 13, 2019 - 1:50:03 PM

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  • HAL Id : hal-00599913, version 1

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Alessandro Citanna, Archishman Chakraborty. Occupational Choice, Incentives and Wealth Distribution. 1999. ⟨hal-00599913⟩

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