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Wages, Supervision and Sharing

  • Sarah Brown

    ()

  • Fathi Fakhfakh
  • John G. Sessions

Instrumental efficiency wage models predict an inverse relationship between wages and supervision with this relationship being more pronounced amongst firms participating in employee sharing. My theoretical exposition predicts that an increase in remuneration reduces monitoring more in "sharing" than in "non-sharing" firms. I explore these predictions using the 1998 Workplace Employee Relations Survey. My empirical results confirm an inverse relationship between supervision and pay, but the trade-off is only heightened by performance-related pay and employee share ownership schemes. I find that employee share ownership and performance-related pay are more successful in alleviating the need to monitor.

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File URL: http://www.le.ac.uk/economics/research/RePEc/lec/lpserc/pserc00-4.pdf
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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Public Sector Economics with number 00/4.

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Handle: RePEc:lec:lpserc:00/4
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  1. 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.
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  8. Bradley T. Ewing & James E. Payne, 1999. "The Trade-Off Between Supervision and Wages: Evidence of Efficiency Wages from the NLSY," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 424-432, October.
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  24. Bowles, Samuel, 1985. "The Production Process in a Competitive Economy: Walrasian, Neo-Hobbesian, and Marxian Models," American Economic Review, American Economic Association, vol. 75(1), pages 16-36, March.
  25. Bradley Ewing & Phanindra Wunnava, 2004. "The Trade-Off Between Supervision Cost and Performance Based Pay: Does Gender Matter?," Small Business Economics, Springer, vol. 23(5), pages 453-460, December.
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  27. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
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  32. repec:dgr:kubcen:19927 is not listed on IDEAS
  33. Chong-en Bai & Chenggang Xu, 1995. "Does Employee Ownership Improve Incentives for Efforts," Boston College Working Papers in Economics 303., Boston College Department of Economics.
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