Worker Self-Selection in a Changing Work Environment

The new world of work is an upcoming organizational feature. It is a new type of work environment; it allows people to do their work anytime, anyplace and anywhere. This calls for less monitoring and trust within the organization. In this thesis insight is given into the effect of this new world of work on the self-selection of workers. A competitive labor market is presumed, where workers differ in their willingness of being monitored and types are private information. It is showed that there can exist a separating equilibrium in which workers self-select into different firms, and firms employing only trustworthy workers will make strictly positive profits. Profit differences across firms persist because separation requires firms employing trustworthy workers to pay out weakly lower wages. However, this equilibrium can only exist if the share of trustworthy workers is low.