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You Get What You Pay For: Tests of Efficency Wage Theories in the United States and Japan

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Author Info
David Levine (University of California, Berkeley)

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Abstract

This paper utilizes a rich data set on workers and their employers in the US and Japan to test several predictions of efficiency wage theories. The data set incorporates numerous objective and subjective performance measures including turnover, effort, absences, satisfaction, and commitment. It also contains extremely good measures of establishment, worker, and job characteristics. For almost all of the performance measures in both countries efficiency wage theories are supported; that is, workers receiving particularly high wages given their observable characteristics report that they are less likely to quit, more satisfied with their pay, and so forth. The between-establishment component of wages is a more reliable predictor of performance than the within-establishment component.

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File URL: http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1054&context=iir
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Publisher Info
Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number 1054.

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Date of creation: 01 Apr 1991
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Handle: RePEc:cdl:indrel:1054

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Related research
Keywords: Levine; efficency wage theories; United States; Japan;

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.:

  1. Rebitzer, James B, 1988. "Unemployment, Labor Relations, and Unit Labor Costs," American Economic Review, American Economic Association, vol. 78(2), pages 389-94, May. [Downloadable!] (restricted)
  2. Harry J. Holzer, 1990. "Wages, Employer Costs, and Employee Performance in the Firm," NBER Working Papers 2830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  4. Wadhwani, S. & Wall, M., 1988. "A Direct Test Of The Efficiency Wage Model Using Uk Micro- Data," Papers 313, London School of Economics - Centre for Labour Economics.
    Other versions:
  5. Blinder, Alan S, 1988. "The Challenge of High Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 1-15, May.
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  6. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March. [Downloadable!] (restricted)
  7. Leonard, Jonathan S, 1987. "Carrots and Sticks: Pay, Supervision, and Turnover," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S136-52, October. [Downloadable!] (restricted)
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  8. Steven G. Allen, 1984. "Trade unions, absenteeism, and exit-voice," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 37(3), pages 331-345, April.
  9. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March. [Downloadable!] (restricted)
  10. Lang, Kevin, 1991. "Persistent Wage Dispersion and Involuntary Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 181-202, February. [Downloadable!] (restricted)
  11. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-47, February. [Downloadable!] (restricted)
  13. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-38, June. [Downloadable!] (restricted)
  14. William T. Dickens & Brian A. Ross, 1984. "Consistent Estimation Using Data From More Than One Sample," NBER Technical Working Papers 0033, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Freeman, Richard B, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 643-73, June. [Downloadable!] (restricted)
  16. William T. Dickens, 1986. "Wages, Employment and the Threat of Collective Action by Workers," NBER Working Papers 1856, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. George A. Akerlof & Andrew K. Rose & Janet L. Yellen, 1988. "Job Switching and Job Satisfaction in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1988-2), pages 495-594. [Downloadable!]
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  1. Mason, Patrick L., 1993. "Variable labor effort, involuntary unemployment, and effective demand," MPRA Paper 11331, University Library of Munich, Germany. [Downloadable!]
  2. Lundborg, Per, 2005. "Individual Wage Setting, Efficiency Wages and Productivity in Sweden," Working Paper Series 205, Trade Union Institute for Economic Research. [Downloadable!]
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