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

Keywords

  • monitoring
  • standards
  • efficiency wages

Cite this