TY - JOUR AU - Lazear, Edward P TI - Incentives and Wage Rigidity JF - National Bureau of Economic Research Working Paper Series VL - No. 1299 PY - 1984 Y2 - March 1984 DO - 10.3386/w1299 UR - http://www.nber.org/papers/w1299 L1 - http://www.nber.org/papers/w1299.pdf N1 - Author contact info: Edward P. Lazear Graduate School of Business Stanford University Stanford, CA 94305 Tel: 650/723-9136 Fax: 650/723-0498 E-Mail: lazear@stanford.edu AB - With the growth of the literature on incentive compensation has come the belief by some that incentive pay may be less rigid than pay that is not designed to effect incentives. Some have gone so far as to argue that this may explain differences in unemployment rates across countries. it is shown that there is no direct link between incentives and wage rigidity. Many compensation schemes that provide incentives have the reverse effect: That is, they tend to make wages more rigid than would be the case were incentives not an issue atall. This paper explores the relationship between wage rigidity and the provision of incentives in a variety of circumstances. ER -