Instrumental efficiency wage models predict an inverse relationship between wages and supervision with this relationship becoming more pronounced amongst firms that participate in some form of employee sharing. To be sure, our theoretical exposition predicts that an increase in total remuneration will elicit a larger cut in optimal monitoring in ‘sharing’ rather than ‘non sharing’ firms. In this paper, we explore these predictions empirically using the British 1998 Workplace Employee Relations Survey. Our results confirm an inverse relationship between supervision and pay but the trade-off is only heightened by the presence of performance related pay and employee share ownership schemes. We also find that employee share ownership and performance related pay are relatively more successful in alleviating the need to monitor, with the rate of profit sharing impacting insignificantly on the level supervision.
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Publisher Info
Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number
02/7.
Length: Date of creation: Apr 2002 Date of revision: Handle: RePEc:lec:leecon:02/7
Contact details of provider: Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK Phone: +44 (0)116 252 2887 Fax: +44 (0)116 252 2908 Email: Web page: http://www.le.ac.uk/economics/