Employee On-the-Job Behavior: A Critical Survey of Economic Models

Abstract

The economic analysis of employee on-the-job behavior (OJB) provides foundations for the modeling of workplace equilibrium, which powerfully augments marketplace equilibrium and deserves greater attention from theorists. This paper seeks to stimulate interest in the formal modeling of optimizing workplace exchange by critically reviewing the small existing literature. The first section outlines the various theories' common analytic framework. Second, the models that posit a dominating worker preference to loaf on the job are summarized. Particular attention is paid the Shapiro-Stiglitz (1984) shirking theory, which is the default model of employee OJB for most economists. The third part reviews the theories, inspired by human-resource practices ubiquitously used in large firms and well documented in the management literature, that critically posit worker preference for fair treatment by management. The final section assesses the various models.

Keywords: On-the-job behavior, workplace equilibrium, wages, shirking theory, human-resource management

JEL Classification: A14, D23, E23, E24, J20, J30, J33, J50, M50