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The Trade-Off Between Supervision and Wages: Evidence of Efficiency Wages from the NLSY


  • Bradley T. Ewing
  • James E. Payne


Standard efficiency wage models suggest that workers employed in places with lower probabilities of identifying shirking will earn more, as will workers who have better alternative opportunities. This paper provides new empirical evidence in support of efficiency wage theory using the National Longitudinal Surveys of Youth data. The empirical results support the prediction of the model that workers employed in larger work groups are paid more, a finding consistent with a supervision–wage trade-off. Additional evidence supports the prediction that workers with better alternative opportunities earn more.

Suggested Citation

  • Bradley T. Ewing & James E. Payne, 1999. "The Trade-Off Between Supervision and Wages: Evidence of Efficiency Wages from the NLSY," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 424-432, October.
  • Handle: RePEc:sej:ancoec:v:66:2:y:1999:p:424-432

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    References listed on IDEAS

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    Cited by:

    1. Robert E. Evenson & Ayal Kimhi & Sanjaya DeSilva, 2000. "Supervision and Transaction Costs: Evidence from Rice Farms in Bicol, the Philippines," Working Papers 814, Economic Growth Center, Yale University.
    2. Evenson, Robert E. & Kimhi, Ayal & Desilva, Sanjaya, 2000. "Supervision And Transaction Costs: Evidence From Rice Farms In Bicol, The Philippines," 2000 Annual meeting, July 30-August 2, Tampa, FL 21788, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. John G. Sessions & Nikolaos Theodoropoulos, 2014. "Tenure, Wage Profiles and Monitoring," Research in Labor Economics,in: New Analyses of Worker Well-Being, volume 38, pages 105-162 Emerald Publishing Ltd.
    4. Sessions, John G., 2008. "Wages, supervision and sharing," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(4), pages 653-672, November.
    5. Sanjay Banerji & Rajesh S. N. Raj & Kunal Sen, 2016. "Monitoring Costs, Credit Constraints and Entrepreneurship," Manchester School, University of Manchester, vol. 84(5), pages 573-599, September.
    6. Tetteh, Rebecca & Mohammed, Safura & Ahmed Azumah, Ayisha, 2017. "What is the effect of wages and supervision on productivity? The perspective of Sunyani Technical University staff," MPRA Paper 81473, University Library of Munich, Germany.
    7. Akinori Tomohara & Akihiko Ohno, 2013. "What are Relevant Work Incentive Models? Shirking Model, Gift Exchange Model, or Reciprocity Model," Journal of Labor Research, Springer, vol. 34(2), pages 241-252, June.
    8. Cheng Chen, 2015. "Management Quality, Firm Organization and International Trade," 2015 Meeting Papers 53, Society for Economic Dynamics.
    9. Bradley Ewing & Phanindra Wunnava, 2004. "The Trade-Off Between Supervision Cost and Performance Based Pay: Does Gender Matter?," Small Business Economics, Springer, vol. 23(5), pages 453-460, December.
    10. James Roumasset, 2006. "The Economics of Agricultural Development: What Have We Learned? Processes," Working Papers 200604, University of Hawaii at Manoa, Department of Economics.
    11. Bradley Ewing & Phanindra Wunnava, 2002. "The Trade-Off Between Supervision Cost and Performance-Based Pay: Does it Matter?," Middlebury College Working Paper Series 0232, Middlebury College, Department of Economics.
    12. Chen Liang & Yili Hong & Bin Gu, 2016. "Effects of IT-enabled Monitoring on Labor Contracting in Online Platforms: Evidence from a Natural Experiment," Working Papers 16-01, NET Institute.
    13. Ourania Karakosta & Nikos Tsakiris, 2009. "Indirect Tax Reforms and Public Goods under Imperfect Competition," University of Cyprus Working Papers in Economics 5-2009, University of Cyprus Department of Economics.

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