The purpose of this project is to develop a series of empirical studies that implement existing models of efficient contracting, labor demand, agency relationships, and investment in the presence of rent-seeking employees. A major innovation in this study is the use of French microdata to be analyzed using a collection of computer files that allow for simultaneous analysis of individual employees, establishments, and enterprises. For the employees, compensation information and skill measures are available. For establishments, employment and compensation levels in various occupations, industry, compensation and information on revenues are available. For enterprises, detailed financial, employment and investment information are available. This research is important because it will provide a detailed and comprehensive summary of the relations among the various components of compensation system design, employment at various skill levels and fundamental measures of firm performance. In addition, because the PI has analyzed similar data for US and Canadian companies, an effort will be made to estimate some models that are directly comparable. This should contribute directly to the ongoing inquiry as to the appropriate framework for modeling negotiated wage rates and the resulting employment demand.
