Consider an employer who wants her employee to work hard. As is well known from the e.ciency wage literature, the employer must pay the (wealth-constrained) employee a positive rent to provide incentives for exerting unobservable e.ort. Alternatively, the employer could make effort observable by costly workplace surveillance. It is argued that a privacy protection law preventing surveillance may increase the total surplus. While such a law reduces the employer’s profit, this loss can be overcompensated by the employee’s gain, because the employer invests in surveillance not only to implement higher effort, but also to reduce the employee’s rent.
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Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number
bgse25_2005.
Length: 19 Date of creation: Sep 2005 Date of revision: Handle: RePEc:bon:bonedp:bgse25_2005
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Find related papers by JEL classification: K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Tiroley, Jean, 2000.
"Corporate Governance,"
CEI Working Paper Series
2000-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
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Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Matthias Kräkel & Anja Schöttner, 2008.
"Relative Performance Pay, Bonuses, and Job-Promotion Tournaments,"
Discussion Papers
245, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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