The Paradox of Labor Discipline With Heterogenous Workers
The introduction of “effort inducible” and “no effort: workers into a standard labor discipline model results in a paradox of sorts: if firms/capitalists cannot tell the difference, the predictable reductions in both output and workers compensation lead to an increase in profits. The resolution is found in the difference in expected productivities of workers woth and without contracts, which creates a reputation effect. When the relative proportions of workers are made variable – the consequence of the acquisition and depreciation of productive skills, and a source of positive feedback – the model exhibits multiple equlibria for plausible parameter values.
|Date of creation:||Jun 2002|
|Date of revision:|
|Contact details of provider:|| |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- William A. Darity & Arthur H. Goldsmith, 1996. "Social Psychology, Unemployment and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 121-140, Winter.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
- Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, vol. 81(1), pages 319-24, March.
- Jullien, Bruno & Picard, Pierre, 1998.
"A Classical Model of Involuntary Unemployment: Efficiency Wages and Macroeconomic Policy,"
Journal of Economic Theory,
Elsevier, vol. 78(2), pages 263-285, February.
- Jullien, B. & Picard, P., 1993. "A Classical Model of Involuntary Unemployment: Efficiency Wages and Macroeconomic Policy," Papers 9305, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- Topel, Robert, 1990. "Specific capital and unemployment: Measuring the costs and consequences of job loss," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 33(1), pages 181-214, January.
- Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(3), pages 254-83, June.
When requesting a correction, please mention this item's handle: RePEc:mdl:mdlpap:0223. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vijaya Wunnava)
If references are entirely missing, you can add them using this form.