Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22931
Authors: 
Schmitz, Patrick W.
Year of Publication: 
2005
Series/Report no.: 
Bonn econ discussion papers 2005,25
Abstract: 
Consider an employer who wants her employee to work hard. As is well known from the efficiency wage literature, the employer must pay the (wealth-constrained) employee a positive rent to provide incentives for exerting unobservable effort. 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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