Wages, Supervision and Sharing:An Analysis of the 1998 Workplace Employee Relations Survey

Sarah Brown () and John Sessions ()

No 02/7, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: Instrumental efficiency wage models predict an inverse relationship between wages and supervision with this relationship becoming more pronounced amongst firms that participate in some form of employee sharing. To be sure, our theoretical exposition predicts that an increase in total remuneration will elicit a larger cut in optimal monitoring in ‘sharing’ rather than ‘non sharing’ firms. In this paper, we explore these predictions empirically using the British 1998 Workplace Employee Relations Survey. Our results confirm an inverse relationship between supervision and pay but the trade-off is only heightened by the presence of performance related pay and employee share ownership schemes. We also find that employee share ownership and performance related pay are relatively more successful in alleviating the need to monitor, with the rate of profit sharing impacting insignificantly on the level supervision.

Keywords: Monitoring; supervision; profit sharing; employee share ownership; efficiency wages (search for similar items in EconPapers)
JEL-codes: J33 J41 J54 (search for similar items in EconPapers)
Date: 2002-04
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (1)

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