DP16926 Will markets provide humane jobs? A hypothesis

Author(s): Arash Nekoei
Publication Date: January 2022
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16926

Most of the key amenities of our today jobs did not emerge in private contracts; instead, they appeared in collective agreements and regulations. I argue that understanding this observation can guide the provision of future amenities. I show that markets underprovide an amenity if workers who value it more have a lower average unobserved productivity. Universal mandate of such amenities improves social welfare when taste-productivity correlation is high. Policies that leverage heterogeneity in the taste-productivity correlation by observable characteristics, e.g., quota and tagging, dominate mandate in the presence of a mild adverse selection.