The Trade-Off between Supervision and Wages: Evidence of Efficiency Wages from the NLSY

Bradley T. Ewing, James E. Payne

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

Standard efficiency wage models suggest that workers employed in places with lower probabilities of identifying shirking will earn more, as will workers who have better alternative opportunities. This paper provides new empirical evidence in support of efficiency wage theory using the National Longitudinal Surveys of Youth data. The empirical results support the prediction of the model that workers employed in larger work groups are paid more, a finding consistent with a supervision-wage trade-off. Additional evidence supports the prediction that workers with better alternative opportunities earn more.

Original languageEnglish
Pages (from-to)424-432
Number of pages9
JournalSouthern Economic Journal
Volume66
Issue number2
DOIs
StatePublished - Oct 1999

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