Piyapromdee, S;
(2018)
Residual Wage Dispersion with Efficiency Wages.
International Economic Review
, 59
(3)
pp. 1315-1343.
10.1111/iere.12305.
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Abstract
This article extends a classic on‐the‐job search model of homogeneous workers and firms by introducing a shirking problem. Workers choose their effort levels and search on the job. Firms elicit effort through wages and monitoring; an inverse relationship between wages and monitoring rates is derived. Wages play a dual role by allocating labor supply and motivating employee effort. This gives rise to an equilibrium wage distribution that contrasts with existing literature. In particular, I show that a hump‐shaped and positively skewed wage distribution, as observed empirically, can be derived even when firms and workers are, respectively, identical.
| Type: | Article |
|---|---|
| Title: | Residual Wage Dispersion with Efficiency Wages |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1111/iere.12305 |
| Publisher version: | https://doi.org/10.1111/iere.12305 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/1568345 |
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