Shirking, Standards and the Probability of Detection

John G. Sessions, John D. Skatun

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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
Issue number2
Early online date22 Sept 2017
Publication statusPublished - Apr 2018

Bibliographical note

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


  • monitoring
  • standards
  • efficiency wages


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