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High Wages - An instrument inducing workers to work more?

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  • Honekamp, Ivonne

Abstract

Wages and their effect on labour supply are not only an important subject for labour economists who aim at measuring substitution and income effects. Additionally, the government is interested in the impact of policy changes on the labour market and companies would like to know if it is possible to increase labour supply and especially productivity by increasing the wage rate. This paper introduces a dynamic version of the traditional model of labour supply and presents model extensions and the underlying behavioural assumptions arising from empirical findings, psychology and neuroscience. It evaluates findings and behavioural assumptions derived so far. None of the contributions investigated in this work is entirely free from criticism. The problem of analysing a comprehensive model of labour supply on the one hand, is the scarcity of suitable subjects to investigate and on the other hand, the individuality of each subject observed. With this work a critical analysis of existing research on labour supply decisions is provided. This shall contribute to motivate and ease future research in this area which has to take these problems into account.

Suggested Citation

  • Honekamp, Ivonne, 2007. "High Wages - An instrument inducing workers to work more?," MPRA Paper 15847, University Library of Munich, Germany, revised 27 Jan 2009.
    • Handle: RePEc:pra:mprapa:15847
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    File URL: https://mpra.ub.uni-muenchen.de/15847/1/MPRA_paper_15847.pdf
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    References listed on IDEAS

    as
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    5. Ernst Fehr & Lorenz Goette, 2007. "Do Workers Work More if Wages Are High? Evidence from a Randomized Field Experiment," American Economic Review, American Economic Association, vol. 97(1), pages 298-317, March.
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    7. Gerald S. Oettinger, 1999. "An Empirical Analysis of the Daily Labor Supply of Stadium Vendors," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 360-392, April.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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