On-the-job leisure as a cause of asymmetric observed-effort distributions

David Lewis Dickinson

Managerial and Decision Economics, 2006, vol. 27, issue 6, pages 435-444

Abstract: When employers observe imperfect measures of worker effort, theorists typically assume that observed effort is unimodal and symmetrically distributed. Though observable effort may be distributed in different ways within a work day, for example, available field data on these effort distributions are rare. The symmetry assumption is largely untestable as a result. This paper presents empirical data from two experimental work environments that question the validity of such assumptions. For these piece-rate work environments the author finds that observed effort is significantly negatively-skew (i.e. modal>mean effort). The author's hypothesis is that on-the-job leisure causes this skewness in observed effort distributions. There are both theoretical and practical implications of this asymmetry. Some implications from the theoretical agency literature that we discuss include: self-selection into rank-order tournaments, optimal wage spreads in rank-order tournaments, and optimal wage contracts with asymmetric information. Copyright © 2006 John Wiley & Sons, Ltd.

Date: 2006
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