Shirking, Standards and the Probability of Detection

John G. Sessions, John D. Skatun

Research output: Working paperDiscussion paper

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Abstract

By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non-shirkers, we show that the uniformly positive (negative) supply-side relationship between wages (unemployment insurance) and effort is no longer guaranteed. Profit maximization on the part of the firm, however, ensures that effort will depend positively (negatively) on wages (unemployment insurance) in equilibrium.
Original languageEnglish
Place of PublicationAberdeen
PublisherUniversity of Aberdeen Business School
Pages1-21
Number of pages21
Publication statusPublished - Mar 2016

Publication series

NameDiscussion Paper in Economics
PublisherUniversity of Aberdeen
No.5
Volume16
ISSN (Electronic)0143-4543

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Keywords

  • Monitoring
  • standards
  • efficiency wages

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Sessions, J. G., & Skatun, J. D. (2016). Shirking, Standards and the Probability of Detection. (pp. 1-21). (Discussion Paper in Economics; Vol. 16, No. 5). Aberdeen: University of Aberdeen Business School.