Monitoring Workers as a Screening Device
AbstractThis paper presents a model of trade-off between employee moral hazard and adverse selection. When productivity is unobservable and heterogeneous, a firm can use the information extracted from shirking (moral hazard) to alleviate the problem of adverse selection and improve its pool of workers. This generates equilibrium shirking and monitoring even if any shirking can be eliminated using employee bonds. The point is demonstrated in a model in which performance bonds serve as an incentive device and in another model in which efficiency wages serve this purpose.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 24 (1991)
Issue (Month): 2 (May)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
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- Rachael Goodhue & Dale Heien & Hyunok Lee & Daniel Sumner, 2003.
"Contracts and Quality in the California Winegrape Industry,"
Review of Industrial Organization,
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- Neunzig, Alexander R., 2002. "Effiziente Fixlohnverträge für arbeitsfreudige Arbeitnehmer mit Berichtspflichten," CSLE Discussion Paper Series 2002-05, Saarland University, CSLE - Center for the Study of Law and Economics.
- Neunzig, Alexander R., 2002. "Effiziente Fixlöhne, Arbeitsfreude und Überwachungskosten," CSLE Discussion Paper Series 2002-02, Saarland University, CSLE - Center for the Study of Law and Economics.
- Hilmer, Michael J., 2002. "Student migration and institution control as screening devices," Economics Letters, Elsevier, vol. 76(1), pages 19-25, June.
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