Motivation and markets

MacLeod, W.B. and Malcomson, J.M. (1997) Motivation and markets , Southampton, UK University of Southampton (Discussion Papers in Economics and Econometrics, 9720).


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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 capitl-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.

Item Type: Monograph (Discussion Paper)
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ePrint ID: 33194
Date :
Date Event
January 1997Published
Date Deposited: 25 Jan 2008
Last Modified: 16 Apr 2017 22:17
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