Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110159
Authors: 
Sessions, John G.
Skåtun, John D.
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 8863
Abstract: 
By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non-shirkers, we show that the uniformly positive (negative) supply-side relationship between wages (unemployment insurance) and effort is no longer guaranteed. Profit maximization on the part of the firm, however, ensures that effort will depend positively (negatively) on wages (unemployment insurance) in equilibrium.
Subjects: 
monitoring
standards
efficiency wages
JEL: 
J33
J41
J54
Document Type: 
Working Paper

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