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Workplace surveillance, privacy protection, and efficiency wages

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  • Schmitz, Patrick W.

Abstract

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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Suggested Citation

  • Schmitz, Patrick W., 2005. "Workplace surveillance, privacy protection, and efficiency wages," Labour Economics, Elsevier, vol. 12(6), pages 727-738, December.
  • Handle: RePEc:eee:labeco:v:12:y:2005:i:6:p:727-738
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    Cited by:

    1. Kräkel, Matthias & Schöttner, Anja, 2008. "Relative Performance Pay, Bonuses, and Job-Promotion Tournaments," Bonn Econ Discussion Papers 16/2008, University of Bonn, Bonn Graduate School of Economics (BGSE).
    2. Kräkel, Matthias, 2014. "Peer Effects and Incentives," Bonn Econ Discussion Papers 03/2014, University of Bonn, Bonn Graduate School of Economics (BGSE).
    3. Sanxi Li & Hailin Sun & Jianye Yan & Xundong Yin, 2015. "Risk aversion in the Nash bargaining problem with uncertainty," Journal of Economics, Springer, vol. 115(3), pages 257-274, July.
    4. Eric S. Chou & Chien-Lung Chen, 2015. "Can Agents Be Better Off with Pay Caps?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(4), pages 1069-1090, October.
    5. Imhof, Lorens & Kräkel, Matthias, 2014. "Bonus pools and the informativeness principle," European Economic Review, Elsevier, vol. 66(C), pages 180-191.
    6. Oliver Gürtler & Felix Höffler, 2015. "Monitoring Of Workers And Product Market Competition: The Role Of Works Councils," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1366-1379, April.
    7. Morlok, Tina & Matt, Christian & Hess, Thomas, 2017. "Privatheitsforschung in den Wirtschaftswissenschaften: Entwicklung, Stand und Perspektiven," Working Papers 1/2017, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    8. Katarzyna Bech & Joanna Tyrowicz, 2017. "Estimating gender wage gap in the presence of efficiency wages -- evidence from European data," GRAPE Working Papers 20, GRAPE Group for Research in Applied Economics.
    9. Matthias Krakel, 2006. "Tournaments versus Piece Rates under Limited Liability," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 5(3), pages 185-199, December.
    10. Lorens Imhof & Matthias Kräkel, 2016. "Ex post unbalanced tournaments," RAND Journal of Economics, RAND Corporation, vol. 47(1), pages 73-98, February.
    11. Matthias Kräkel, 2010. "Double-Sided Moral Hazard, Efficiency Wages, and Litigation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 26(2), pages 337-364.
    12. Kräkel, Matthias & Schöttner, Anja, 2010. "Minimum wages and excessive effort supply," Economics Letters, Elsevier, vol. 108(3), pages 341-344, September.
    13. Kräkel, Matthias, 2016. "Peer effects and incentives," Games and Economic Behavior, Elsevier, vol. 97(C), pages 120-127.
    14. Kräkel, Matthias & Schöttner, Anja, 2012. "Internal labor markets and worker rents," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 491-509.
    15. Li Sanxi & Yao Dongmin & Xiao Hao, 2013. "Contract Bargaining with a Risk-Averse Agent," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 285-301, November.
    16. Matthias Kräkel, 2016. "Human Capital Investment and Work Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 627-651, September.
    17. Dittrich, Marcus & Städter, Silvio, 2015. "Moral hazard and bargaining over incentive contracts," Research in Economics, Elsevier, vol. 69(1), pages 75-85.
    18. Marcus Dittrich & Silvio Städter, 2014. "Moral Hazard and Bargaining over Incentive Contracts," CESifo Working Paper Series 4920, CESifo Group Munich.

    More about this item

    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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