Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22931 
Year of Publication: 
2005
Series/Report no.: 
Bonn Econ Discussion Papers No. 25/2005
Publisher: 
University of Bonn, Bonn Graduate School of Economics (BGSE), Bonn
Abstract: 
Consider an employer who wants her employee to work hard. As is well known from the e.ciency wage literature, the employer must pay the (wealth-constrained) employee a positive rent to provide incentives for exerting unobservable e.ort. Alternatively, the employer could make effort observable by costly workplace surveillance. It is argued that a privacy protection law preventing surveillance may increase the total surplus. While such a law reduces the employer’s profit, this loss can be overcompensated by the employee’s gain, because the employer invests in surveillance not only to implement higher effort, but also to reduce the employee’s rent.
Subjects: 
Privacy protection laws
workplace surveillance
moral hazard
JEL: 
K31
J83
Document Type: 
Working Paper

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