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Monitoring and efficiency wage versus profit sharing in a revolutionary context

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  • Amal Hili

    () (ISG-Sousse, EPEE-Universit´e d’Evry, Association MASE-ESSAI)

Abstract

We propose to study the trade off between two incentive strategies (moni- toring and efficiency wage versus profit sharing), operated by one firm to induce more efforts among employees. We deal first with a normal context where shirkers bear the risk to be fired. We consider second a particular revolutionary context where employees, even when they go on infinite strikes, would not be dismissed as inspired by the tunisian revolution and more precisely by social movements and general strikes occurring among tunisian workers after revolution. We prove, in the first context, that the profit share to be distributed at equilibrium is pos- itive and depending on the monitoring strategy. In this first context, the two strategies are shown to be strategic complements for low values of risk aversion and strategic substitutes for high ones. We show in the second framework, the emergence of a particular case where the capital holder increases the profit share distributed to employees relative to the one in the first context. This equilibrium profit share is proven to be independent of the monitoring strategy.

Suggested Citation

  • Amal Hili, 2014. "Monitoring and efficiency wage versus profit sharing in a revolutionary context," Documents de recherche 14-02, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  • Handle: RePEc:eve:wpaper:14-02
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    Keywords

    monitoring; efficiency wage; profit sharing; strikes; risk aversion;

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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