SLOWING DOWN

Yu-Fu Chen and Gylfi Zoega

No 266, Dundee Discussion Papers in Economics from Economic Studies, University of Dundee

Abstract: We extend the efficiency wage model of Shapiro and Stiglitz to account for the observation that workers’ effort has a tendency to fall when they approach the end of their employment contract. In particular, we find that the efficiency wage increases when the end of term approaches for a given rate of unemployment. We draw implications for the behavior of workers who are approaching retirement, temporary employment contracts, and the advance notice of impending job loss.

Keywords: Wage setting; shirking; finite horizons (search for similar items in EconPapers)
JEL-codes: J21 J31 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2012-06
New Economics Papers: this item is included in nep-lab and nep-lma
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Related works:
Working Paper: Slowing down (2012)
Working Paper: Slowing Down (2012)
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