Supervision and Work Content: Industry level evidence

The existence of a trade-off between supervision and wages has proven to be a challenging empirical issue due to the lack of direct measures of supervision and its simultaneous setting with wages. This article proposes a novel measure of supervisory frequency and an explanation based on an old idea, namely that firm's choice depends on how difficult it is to monitor the workers they employ. We test this hypothesis using occupational level data on the frequency of super-visory detailed work activities and measures of work content. At the industry level the analysis suggests supervision increases with the complexity of the activities performed by workers, hence, in striking contrast to previous studies relying on the ratio of supervisors to employees, industries that employ more workers performing non-routine cognitive activities also rely on supervision the most. Moreover, at the individual level there is no evidence of a trade-off but only weak evidence of a positive relation between wages and supervision which seems to be a complement rather than a substitute to wage incentives.