Tenure, Wage Profiles and Monitoring

John Sessions (john.sessions@ncl.ac.uk) and Nikolaos Theodoropoulos

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: Efficiency wage theory predicts that firms can induce worker effort by the carrot of high wages and / or the stick of monitoring worker performance. Another option available to firms is to tilt the remuneration package over time such that the lure of high future earnings acts as a deterrent to current shirking. In this paper we undertake the first empirical investigation of this relationship between the slope of the wage-tenure profile and the level of monitoring. On the assumption that firms strive for the optimal trade-off between these various instruments, we hypothesise that increased monitoring leads to a decline in the slope of the wage-tenure profile. Our empirical analysis, using two cross sections of matched employer-employee British data, provides robust support for this prediction.

Keywords: Monitoring; Tenure; Efficiency; Wages. (search for similar items in EconPapers)
Pages: 40 pages
Date: 2009-09
New Economics Papers: this item is included in nep-edu and nep-lab
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https://papers.econ.ucy.ac.cy/RePEc/papers/05-09.pdf (application/pdf)

Related works:
Chapter: Tenure, Wage Profiles and Monitoring (2014)
Working Paper: Tenure, Wage Profiles and Monitoring (2009)
Working Paper: Tenure, Wage Profiles and Monitoring (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:4-2009

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