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 language | English |
|---|---|
| Pages (from-to) | 103-118 |
| Number of pages | 16 |
| Journal | Bulletin of Economic Research |
| Volume | 70 |
| Issue number | 2 |
| Early online date | 22 Sept 2017 |
| DOIs | |
| Publication status | Published - Apr 2018 |
Bibliographical note
We are grateful to two anonymous referees and the editors of this journal for helpful comments. The normal disclaimer applies.Keywords
- monitoring
- standards
- efficiency wages
Access to Document
- Accepted Manuscript
This is the peer reviewed version of the following article: Sessions, JG & Skatun, JD 2018, 'Shirking, Standards and the Probability of Detection' Bulletin of Economic Research, vol 70, no. 2, pp. 103-118., which has been published in final form at DOI: 10.1111/boer.12143. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving