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Carrots and Sticks: Pay, Supervision, and Turnover

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  • Leonard, Jonathan S

Abstract

The efficiency wage model (EWM) has been advanced as an explanation for large and persistent wage differentials. The shirking version of the EWM assumes a trade-off b etween self-supervision and external supervision. The turnover versio n assumes turnover is costly to the firm. Variation across firms in t he cost of monitoring/shirking or turnover then is hypothesized to ac count for wage variations across firms for homogeneous workers. Using a new sample of firm data, this paper presents empirical evidence of the trade-off of wage premiums for supervisory intensity and turnove r. Little evidence is found to support either version of the EWM. Copyright 1987 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 5 (1987)
Issue (Month): 4 (October)
Pages: S136-52

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Handle: RePEc:ucp:jlabec:v:5:y:1987:i:4:p:s136-52

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  1. Katharine G. Abraham & Henry S. Farber, 1986. "Job Duration, Seniority and Earnings," Working papers 407, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-59, October.
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