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What kind of corporate structure would let people decide to leave on their own, not have someone force them out? Why bother firing anyone when, instead, you ca
by opticksversi 18y ago
What kind of corporate structure would let people decide to leave on their own, not have someone force them out?
Why bother firing anyone when, instead, you can simply reduce their compensation?
- eru 18y agoInteresting question. See "Why Wages Don't Fall During a Recession" by Truman F. Bewley. (Review at http://cowles.econ.yale.edu/books/bewley/tfb_wages.htm http://cowles.econ.yale.edu/books/bewley/tfb_wages.htm) Short answer: Cutting compensation is feared as even worse for morale than firing.
- opticksversi 18y agoThanks for the lead. http://www.nber.org/~rosenbla/econ110-04/lecture/stickywages.pdf http://www.nber.org/~rosenbla/econ110-04/lecture/stickywages... [pdf] Mr Bewley’s theory has some interesting implications. Pay cuts are more likely at firms whose demand for labour is price-sensitive, such as those in highly competitive industries. Since many markets are becoming more competitive, wages may also be getting more flexible—and unemployment may rise less in recessions. Wages are also likely to be less rigid in short-term jobs, where workers do not become attached to their firm. ... Mr Bewley’s book is not the last word on sticky wages. Some of his findings are probably specific to the north-eastern United States in the early 1990s.
- eru 18y ago> Mr Bewley’s book is not the last word on sticky wages. Some of his findings are probably specific to the north-eastern United States in the early 1990s. That's probably true. His book consists of interviews with managers etc. It makes for an interesting read.