HANDBOOK OF LABOR ECONOMICS, VOL 4A

Handbook of Labor Economics, Vol. 4, No. Suppl PA, 2011

ISSN: 1573-4463

doi: 10.1016/S0169-7218(11)04114-1

Chapter 8Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches to Agency and Labor Markets

James B. Rebitzer^*, Lowell J. Taylor^**

^* Boston University and NBER

^** Carnegie Mellon University

Abstract

Employers structure pay and employment relationships to mitigate agency problems. A large literature in economics documents how the resolution of these problems shapes personnel policies and labor markets. For the most part, the study of agency in employment relationships relies on highly stylized assumptions regarding human motivation, e.g., that employees seek to earn as much money as possible with minimal effort. ...