Wages and Incentive Pay

Soon Beng Chew

Chapter 8 in Labour Economics and Public Policy:Managing the Labour Markets for Competitiveness, 2017, pp 105-121 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Throughout much of this book, we assume that every agreement in the labour market will be honoured. For instance, in the competitive labour market, the equilibrium wage and employment are WC and EC respectively as shown in Figure 6.3 of Chapter 6. Workers will get paid WC and each worker will produce VMP according to the figure. In other words, no one shirks the work duties. This means that the unit labour cost (ULC) is always equal to one at J. However, some employees do put in less effort than they are supposed to if they know they would not be caught. This problem of shirking will lead to a rise in value of ULC…

Keywords: Labour Market Competitiveness; Labour Unions; Macro-Focused Union; Union Social Responsibility; Union as a Public Good (search for similar items in EconPapers)
JEL-codes: J08 (search for similar items in EconPapers)
Date: 2017
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