The Determinants of Shirking: Analysis and Evidence on Job Loser Unemployment
AbstractThe unemployment rate captures the search behavior of job losers, as well as new entrants or reentrants to the labor force. The behavior of these unemployed groups can display significant differences. This paper extends the Shapiro-Stiglitz model to include an analysis of equilibrium job loss from shirking and empirically tests for the relationship between labor market conditions and job loss. This process identifies empirical differences between job losers and other unemployed members of the labor force. The equilibrium level of job loser unemployment is shown to fluctuate given the degree to which firms monitor shirking over the business cycle. While this extension does not change the core results of the efficiency wage model, it does provide some additional insights. For example, in equilibrium, everyone shirks some. Consequently, on-the-job leisure is a form of employee benefit that is regulated by the extent to which the firm monitors, reprimands, and fires shirkers. Across the business cycle the firm's shadow price of turnover changes, and hence the equilibrium level of job losers.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 31 (2005)
Issue (Month): 1 (Winter)
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Unemployment rate; unemployment;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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