Estimating the Shirking Model With Variable Effort'

CORE Discussion Paper No. 2003/75

19 Pages Posted: 31 May 2007

See all articles by Eric Strobl

Eric Strobl

Ecole Polytechnique, Paris - Department of Economic Sciences; IZA Institute of Labor Economics

Frank Walsh

National University of Ireland - University College Dublin

Date Written: October 2003

Abstract

We show in a theoretical efficiency wage model where firms differ in monitoring intensity or in the effort intensity of their technologies that the impact of monitoring intensity on wages is ambiguous, a result that mirrors evidence from the empirical literature. We argue that to correctly specify the impact of monitoring on wages, the interaction between monitoring and effort needs to be modelled. Results using a worker, firm panel from Ghana which contains reasonable effort and monitoring proxies show that the return to effort is higher in poorly monitored sectors as the theory suggests.

Keywords: Efficiency wages, effort, monitoring intensity

JEL Classification: J30

Suggested Citation

Strobl, Eric and Walsh, Frank, Estimating the Shirking Model With Variable Effort' (October 2003). CORE Discussion Paper No. 2003/75, Available at SSRN: https://ssrn.com/abstract=988660 or http://dx.doi.org/10.2139/ssrn.988660

Eric Strobl (Contact Author)

Ecole Polytechnique, Paris - Department of Economic Sciences ( email )

Ecole Polytechnique
Department of Economics
Paris, 75005
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Frank Walsh

National University of Ireland - University College Dublin ( email )

Department of Economics
Belfield
Dublin 4
Ireland
353-1-7068697 (Phone)
353-1-2830068 (Fax)

HOME PAGE: http://www.ucd.ie/~economic/staff/fwalsh/

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