Monitoring and Pay
The shirking model of efficiency wages has been thought to imply that monitoring and pay are substitute instruments for motivating workers. We demonstrate that this result is not generally true. As monitoring becomes cheaper, a given effort level will be implemented with more monitoring and less pay, but it is typically also optimal to implement a higher effort. The article provides conditions under which the latter "scale effect" dominates the former "substitution effect" and vice versa. If the ease of monitoring varies across occupations, the model predicts a nonmonotonic relationship between the wage level and workers' rents.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:20:y:2002:i:2:p:201-216. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)
If references are entirely missing, you can add them using this form.