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Estimating the shirking model with variable effort

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  • STROBL, Eric
  • WALSH, Frank

Abstract

We show in a theoretical efficiency wage model where firms differ in monitoring intensity or in the effort intensity of their technologies that the impact of monitoring intensity on wages is ambiguous, a result that mirrors evidence from the empirical literature. We argue that to correctly specify the impact of monitoring on wages, the interaction between monitoring and effort needs to be modelled. Results using a worker, firm panel from Ghana which contains reasonable effort andmonitoring proxies show that the return to effort is higher in poorly monitored sectors as the theory suggests.

Suggested Citation

  • STROBL, Eric & WALSH, Frank, 2003. "Estimating the shirking model with variable effort," LIDAM Discussion Papers CORE 2003075, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2003075
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    Citations

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    Cited by:

    1. John G. Sessions & John D. Skåtun, 2017. "Performance-Related Pay, Efficiency Wages and the Shape of the Tenure-Earnings Profile," Manchester School, University of Manchester, vol. 85(3), pages 295-319, June.
    2. Zenou, Yves, 2013. "Spatial versus social mismatch," Journal of Urban Economics, Elsevier, vol. 74(C), pages 113-132.
    3. Zenou, Yves, 2011. "Explaining the Black/White Employment Gap: The Role of Weak Ties," CEPR Discussion Papers 8582, C.E.P.R. Discussion Papers.
    4. Gareth D. Myles & Hana Yousefi, 2020. "Corruption as an Occupational Choice: Endogenous Corruption and Tax Policy," Southern Economic Journal, John Wiley & Sons, vol. 86(4), pages 1446-1474, April.
    5. John G. Sessions & John D. Skåtun, 2018. "Shirking, Standards And The Probability Of Detection," Bulletin of Economic Research, Wiley Blackwell, vol. 70(2), pages 103-118, April.
    6. Nitsa Kasir & Idit Sohlberg, 2018. "The Impact of Supervision and Incentive Process in Explaining Wage Profile and Variance," Papers 1806.01332, arXiv.org.
    7. 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 Group Publishing Limited.
    8. 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.
    9. Richard A. Parsons, 2013. "An Empirical Test of the Efficiency Wage Hypothesis," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 16(3), pages 369-387.
    10. Jim Malley & Hassan Molana, 2007. "The Relationship between Output and Unemployment with Efficiency Wages," German Economic Review, Verein für Socialpolitik, vol. 8(4), pages 561-577, November.
    11. Sessions, John G. & Skåtun, John D., 2015. "Shirking, Standards and the Probability of Detection," IZA Discussion Papers 8863, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    efficiency wages; effort; monitoring intensity;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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