Review

This article explores some of the determinants of compensation in the United States. The authors suggest that compensation systems should be viewed as an integral part of the production process. They highlight the diversity in observed systems of pay that is often overlooked when examining wage trends from a macroeconomic perspective. 

Commentary on "Job Characteristics, Wages, and the Employment Contract" by Daniel Parent and W. Bentley MacLeod.

This article formulates a somewhat speculative model of work motivation stimulated by interviews with 330 business people, labor leaders, counselors of unemployed workers, labor market intermediaries (headhunters), labor lawyers, and management consultants.  The model incorporates ideas from psychology into the utility-maximizing framework of economics.

Commentary on "Work Motiviation" by Truman Bewley.

This article focuses on the contract theoretic underpinnings of wage adjustment and worker displacement in moral-hazard models of the labor market. The authors show that contracting imperfections play a key role in determining the fragility of employment relationships in the face of shocks to productivity, as well as influencing the form of worker compensation. 

Commentary on "Contract-Theoretic Approaches to Wages and Displacement" by Wouter J. den Haan, Garey Ramey, and Joel Watson.

This article focuses on employment protection legislation (also called “firing costs”). The author explores who gains and who loses from such regulation and the equilibrium level of employment protection.

Commentary on "Assessing the Political Viability of Labor Market Reform The Case of Employment Protection" by Gilles Saint-Paul.

This article examines the Federal Reserve Bank of Cleveland Community Salary Survey from 1957 to 1996 for the impact of inflation on the size of good or bad wage shocks. 

Commentary on "Firms' Wage Adjustments: A Break from the Past" by Erica L. Groshen and Mark E. Schweitzer.

This article sheds light on an important question for macroeconomic policy and economic theory: Are nominal wage changes skewed away from wage cuts? In particular, does downward nominal rigidity censor some would be wage cuts, transforming some wage changes that would be negative into zero-wage changes? To answer this question, the author documents key properties of the distribution of wage changes in panel data. 

Commentary on "Are Nominal Wage Changes Skewed Away From Wage Cuts?" by Kenneth J. McLaughlin.