Why pay for jobs (and not for tasks)?

Consider a principal who assigns a job with two tasks to two identical agents. Monitoring the agents’ efforts is costly. Therefore the principal rewards the agents based on their (noisy) relative outputs. This study addresses the question of whether the principal should evaluate the outputs of each task separately and award two winner prizes, one for each task, or whether it is better to award only one winner prize to the agent who performs the best over the two tasks. There are two countervailing effects. First, there is a prize-diluting effect, because for a given budget, the prizes will be smaller when there are two winner prizes than when there is only one winner prize. The prize-diluting effect reduces the agents’ incentives to invest their effort when there are two winner prizes. Second, there is a noise effect because the noisiness of the evaluation is reduced when there are two winner prizes. The main contribution of this study is to show that the prize-diluting effect dominates the noise effect. Hence, in general, principals will award prizes for combined tasks, and not for separate tasks. Several extensions are considered to test the robustness of this dominance result

Are vacancies difficult to fill? an empirical investigation of the Dutch labour market

The search behaviour of employers is focused on by developing a model to analyse employers' recruitment behaviour taking into account job seekers' search process. In addition, the causes of anticipated difficulties on firms' recruitment behaviour that may slow down the process of filling vacancies is investigated empirically. To do so, a survey is employed which contains information on the two main problems encountered by Dutch employers during recruitment: namely, an insufficient number of applicants and too many rejections of job offers. High educational and experience requirements are found to cause a low rate of response to the vacancy posted; offers of permanent positions tend to be rejected by job seekers due to disagreements on the level of works offered. Further, the condition of the supply side of the labour market strongly influences employers' recruitment behaviour, as employers increase their search intensity whenever problems are anticipated