The strategic advantage of being less skilled

Ability need not pay if public goods are financed by voluntary contributions. This result, first shown for exogenously given income is reinforced if income is endogenously generated. In equilibrium, welfare of complete free riders is ranked according to their wage rate, whereas for contributors a higher productivity is disadvantageous. Furthermore, it can be shown that the set of contributors consists of the skilled agents and only the less productive will act as complete free riders. This results in a strong incentive for being less skilled.