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Wages, Supervision and Sharing:An Analysis of the 1998 Workplace Employee Relations Survey

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  • Sarah Brown
  • John G. Sessions

Abstract

Instrumental efficiency wage models predict an inverse relationship between wages and supervision with this relationship becoming more pronounced amongst firms that participate in some form of employee sharing. To be sure, our theoretical exposition predicts that an increase in total remuneration will elicit a larger cut in optimal monitoring in ‘sharing’ rather than ‘non sharing’ firms. In this paper, we explore these predictions empirically using the British 1998 Workplace Employee Relations Survey. Our results confirm an inverse relationship between supervision and pay but the trade-off is only heightened by the presence of performance related pay and employee share ownership schemes. We also find that employee share ownership and performance related pay are relatively more successful in alleviating the need to monitor, with the rate of profit sharing impacting insignificantly on the level supervision.

Suggested Citation

  • Sarah Brown & John G. Sessions, 2002. "Wages, Supervision and Sharing:An Analysis of the 1998 Workplace Employee Relations Survey," Discussion Papers in Economics 02/7, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:02/7
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/econ02-7.pdf
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    References listed on IDEAS

    as
    1. Leonard, Jonathan S, 1987. "Carrots and Sticks: Pay, Supervision, and Turnover," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 136-152, October.
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    Cited by:

    1. Luiz A. Esteves, 2007. "Efficiency Wage and Labor Discipline Models: Matched-Panel Evidence from Brazilian Construction Industry," Working Papers 0058, Universidade Federal do Paraná, Department of Economics.

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    More about this item

    Keywords

    Monitoring; supervision; profit sharing; employee share ownership; efficiency wages;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms

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