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Why Do Firms Monitor Workers?

In: Advances in the Theory and Measurement of Unemployment

Author

Listed:
  • William T. Dickens
  • Lawrence F. Katz
  • Kevin Lang
  • Lawrence H. Summers

Abstract

In his seminal analysis of the economics of crime, Gary Becker (1968) pointed out that the cost of achieving any given degree of deterrence is minimized by combining an infinitesimal probability of detection and an arbitrarily large punishment. In Kolm’s (1973) phrase, an optimizing government ‘should hang tax evaders with probability zero’. While Becker’s observation is a correct assertion about how crime can be deterred at lowest cost, it is wildly inaccurate as a positive theory of government law enforcement activities. Governments typically spend significant amounts on the detection of crime.

Suggested Citation

  • William T. Dickens & Lawrence F. Katz & Kevin Lang & Lawrence H. Summers, 1990. "Why Do Firms Monitor Workers?," Palgrave Macmillan Books, in: Yoram Weiss & Gideon Fishelson (ed.), Advances in the Theory and Measurement of Unemployment, chapter 6, pages 159-171, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-10688-2_6
    DOI: 10.1007/978-1-349-10688-2_6
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    Cited by:

    1. Lin, Chung-cheng, 2004. "Bonding, shirking and adverse selection," Economic Modelling, Elsevier, vol. 21(3), pages 545-560, May.
    2. Chang, Juin-jen & Lai, Ching-chong & Lin, Chung-cheng, 2003. "Profit sharing, worker effort, and double-sided moral hazard in an efficiency wage model," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 75-93, March.

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