Shirking, Standards and the Probability of Detection
16 Pages Posted: 13 Apr 2018
There are 2 versions of this paper
Shirking, Standards and the Probability of Detection
Date Written: April 2018
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: efficiency wages, monitoring, standards
JEL Classification: J33, J41, J54
Suggested Citation: Suggested Citation
IZA Institute of Labor Economics
P.O. Box 7240
Bonn, D-53072
Germany
Do you have a job opening that you would like to promote on SSRN?
Shirking, Standards and the Probability of Detection
This is a Wiley-Blackwell Publishing paper. Wiley-Blackwell Publishing charges $42.00 .
File name: BOER.pdf
Size: 0K
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.
