Shirking, Standards and the Probability of Detection

John G. Sessions, John D. Skatun

Research output: Contribution to journalArticle

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
Pages (from-to)103-118
Number of pages16
JournalBulletin of Economic Research
Volume70
Issue number2
Early online date22 Sep 2017
DOIs
Publication statusPublished - Apr 2018

Fingerprint

Shirking
Unemployment insurance
Probability of detection
Efficiency wages
Wages
Profit maximization
Supply side

Keywords

  • monitoring
  • standards
  • efficiency wages

Cite this

Shirking, Standards and the Probability of Detection. / Sessions, John G.; Skatun, John D.

In: Bulletin of Economic Research, Vol. 70, No. 2, 04.2018, p. 103-118.

Research output: Contribution to journalArticle

@article{85c4febb70d24a6985dc510c53cf478e,
title = "Shirking, Standards and the Probability of Detection",
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.",
keywords = "monitoring, standards, efficiency wages",
author = "Sessions, {John G.} and Skatun, {John D.}",
note = "We are grateful to two anonymous referees and the editors of this journal for helpful comments. The normal disclaimer applies.",
year = "2018",
month = "4",
doi = "10.1111/boer.12143",
language = "English",
volume = "70",
pages = "103--118",
journal = "Bulletin of Economic Research",
issn = "0307-3378",
publisher = "Wiley-Blackwell",
number = "2",

}

TY - JOUR

T1 - Shirking, Standards and the Probability of Detection

AU - Sessions, John G.

AU - Skatun, John D.

N1 - We are grateful to two anonymous referees and the editors of this journal for helpful comments. The normal disclaimer applies.

PY - 2018/4

Y1 - 2018/4

N2 - 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.

AB - 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.

KW - monitoring

KW - standards

KW - efficiency wages

U2 - 10.1111/boer.12143

DO - 10.1111/boer.12143

M3 - Article

VL - 70

SP - 103

EP - 118

JO - Bulletin of Economic Research

JF - Bulletin of Economic Research

SN - 0307-3378

IS - 2

ER -