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The Determinants of Shirking: Analysis and Evidence on Job Loser Unemployment


  • Louis J. Pantuosco

    () (College of Business, Winthrop University)

  • Darrell Parker

    (Georgia Southern University)


The unemployment rate captures the search behavior of job losers, as well as new entrants or reentrants to the labor force. The behavior of these unemployed groups can display significant differences. This paper extends the Shapiro-Stiglitz model to include an analysis of equilibrium job loss from shirking and empirically tests for the relationship between labor market conditions and job loss. This process identifies empirical differences between job losers and other unemployed members of the labor force. The equilibrium level of job loser unemployment is shown to fluctuate given the degree to which firms monitor shirking over the business cycle. While this extension does not change the core results of the efficiency wage model, it does provide some additional insights. For example, in equilibrium, everyone shirks some. Consequently, on-the-job leisure is a form of employee benefit that is regulated by the extent to which the firm monitors, reprimands, and fires shirkers. Across the business cycle the firm's shadow price of turnover changes, and hence the equilibrium level of job losers.

Suggested Citation

  • Louis J. Pantuosco & Darrell Parker, 2005. "The Determinants of Shirking: Analysis and Evidence on Job Loser Unemployment," Eastern Economic Journal, Eastern Economic Association, vol. 31(1), pages 7-21, Winter.
  • Handle: RePEc:eej:eeconj:v:31:y:2005:i:1:p:7-21

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    References listed on IDEAS

    1. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-782, July.
    2. Timothy J. Bartik, 2003. "Local Economic Development Policies," Upjohn Working Papers and Journal Articles 03-91, W.E. Upjohn Institute for Employment Research.
    3. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, November.
    4. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters,in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290 National Bureau of Economic Research, Inc.
    5. Richard B. Freeman & Casey Ichniowski, 1988. "When Public Sector Workers Unionize," NBER Books, National Bureau of Economic Research, Inc, number free88-1, January.
    6. Dye, Ronald A & Antle, Rick, 1984. "Self-Selection via Fringe Benefits," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 388-411, July.
    7. Thomas Hyclak & Geraint Johnes, 1992. "Wage Flexibility and Unemployment Dynamics in Regional Labor Markets," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wfud, November.
    8. Lou Pantuosco & Darrell Parker & Gary Stone, 2001. "The Effect of Unions on Labor Markets and Economic Growth: An Analysis of State Data," Journal of Labor Research, Transaction Publishers, vol. 22(1), pages 195-205, January.
    9. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    10. Kim, Se-Jik & Kim, Yong Jin, 2000. "Growth gains from trade and education," Journal of International Economics, Elsevier, vol. 50(2), pages 519-545, April.
    11. Pantuosco, Lou & Parker, Darrell, 1998. "Sources of Prevailing Differences in Unemployment Rates For Selected Regional Pairs," The Review of Regional Studies, Southern Regional Science Association, vol. 28(2), pages 35-46, Fall.
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    More about this item


    Unemployment rate; unemployment;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search


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