Employee Crime and the Monitoring Puzzle
The simplest economic theories of crime predict that profit-maximizing firms should follow strategies of minimal monitoring with large penalties for employee crime. The authors investigate possible reasons why firms actually spend considerable resources trying to detect employee malfeasance. They find that the most plausible explanations for firms' large outlays on monitoring of employees--legal restrictions on penalty clauses in contracts and the adverse impact of harsh punishment schemes on worker morale--are also consistent with the payment of premium (rent-generating) wages by cost-minimizing firms. Coauthors are Lawrence F. Katz, Kevin Lang, and Lawrence H. Summers. Copyright 1989 by University of Chicago Press.
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- Eaton, Curtis & White, William D, 1983. "The Economy of High Wages: An Agency Problem," Economica, London School of Economics and Political Science, vol. 50(198), pages 175-81, May.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- Wessels, Walter J, 1980. "The Effect of Minimum Wages in the Presence of Fringe Benefits: An Expanded Model," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 293-313, April.
- Nalebuff, Barry & Scharfstein, David, 1987. "Testing in Models of Asymmetric Information," Review of Economic Studies, Wiley Blackwell, vol. 54(2), pages 265-77, April.
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