Deferred Compensation in Multiperiod Labor Contracts: An Experimental Test of Lazear's Model

  title={Deferred Compensation in Multiperiod Labor Contracts: An Experimental Test of Lazear's Model},
  author={Steffen Huck and Andrew J. Seltzer and Brian Wallace},
  journal={The American Economic Review},
This paper provides the first experimental test of Edward Lazear's (1979) model of deferred compensation. We examine the relationship between firms' wage offers and workers' effort supply in a multi-period environment. If firms can ex ante commit to a wage schedule with deferred compensation, workers should respond by supplying sufficient effort to avoid dismissal. We contrast this full-commitment case to controls with no commitment and computer-generated wages in order to examine the roles of… 

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