Trade Unions, Efficiency Wages, and Shirking

George Bulkley () and Gareth Myles ()

Oxford Economic Papers, 1996, vol. 48, issue 1, pages 75-88

Abstract: Efficiency wage models typically study the determination of wages and effort levels in the context of a labour market where the supply side is competitive. In this paper, the authors examine the effects of unionization on wages and effort. In addition to the monitoring technology where a noisy signal of each workers performance is received, they propose and investigate a spot-check monitoring technology where the effort of a fraction of workers is measured exactly. They examine models where the union can bargain over wages alone, and over wages and effort. In all cases, the authors show that the popular wisdom that unions reduce effort is generally false. Copyright 1996 by Royal Economic Society.

Date: 1996
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