Why Do Firms Monitor Workers?

William T. Dickens, Lawrence Katz, Kevin Lang and Lawrence H. Summers

Chapter 6 in Advances in the Theory and Measurement of Unemployment, 1990, pp 159-171 from Palgrave Macmillan

Abstract: Abstract In his seminal analysis of the economics of crime, Gary Becker (1968) pointed out that the cost of achieving any given degree of deterrence is minimized by combining an infinitesimal probability of detection and an arbitrarily large punishment. In Kolm’s (1973) phrase, an optimizing government ‘should hang tax evaders with probability zero’. While Becker’s observation is a correct assertion about how crime can be deterred at lowest cost, it is wildly inaccurate as a positive theory of government law enforcement activities. Governments typically spend significant amounts on the detection of crime.

Keywords: American Economic Review; Wage Premia; Reservation Wage; Efficiency Wage; Gift Exchange (search for similar items in EconPapers)
Date: 1990
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DOI: 10.1007/978-1-349-10688-2_6

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