Motivation and markets
Motivation and markets
Many workers receive pay based on subjectively assessed performance, yet the shirking model of efficiency wages excludes it. This paper incorporates such pay, with the following results. Performance pay is more efficient than efficiency wages when the costs of having a job vacant are low and qualified workers in short supply. More capital-intensive industries pay more than less capital-intensive industries, as observed in studies of interindustry wages differentials. Sustaining an efficient outcome requires a social convention similar to the notion of a fair wage. The model also makes predictions about the relationship between turnover, wages, growth and unemployment.
University of Southampton
MacLeod, W.B.
192969b5-e8bf-42a7-9d47-582c862b6ed0
Malcomson, J.M.
575efff9-eb89-418a-beb0-c4b45957d805
January 1997
MacLeod, W.B.
192969b5-e8bf-42a7-9d47-582c862b6ed0
Malcomson, J.M.
575efff9-eb89-418a-beb0-c4b45957d805
MacLeod, W.B. and Malcomson, J.M.
(1997)
Motivation and markets
(Discussion Papers in Economics and Econometrics, 9720)
Southampton, UK.
University of Southampton
Record type:
Monograph
(Discussion Paper)
Abstract
Many workers receive pay based on subjectively assessed performance, yet the shirking model of efficiency wages excludes it. This paper incorporates such pay, with the following results. Performance pay is more efficient than efficiency wages when the costs of having a job vacant are low and qualified workers in short supply. More capital-intensive industries pay more than less capital-intensive industries, as observed in studies of interindustry wages differentials. Sustaining an efficient outcome requires a social convention similar to the notion of a fair wage. The model also makes predictions about the relationship between turnover, wages, growth and unemployment.
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Published date: January 1997
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Local EPrints ID: 33194
URI: http://eprints.soton.ac.uk/id/eprint/33194
PURE UUID: 8fd979dd-7e85-41e2-83de-749ff9e20e9a
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Date deposited: 25 Jan 2008
Last modified: 22 Jul 2022 20:40
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Contributors
Author:
W.B. MacLeod
Author:
J.M. Malcomson
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