Work incentive and productivity in Spain

M. Isabel Pisa and Rosario Sánchez

MPRA Paper from University Library of Munich, Germany

Abstract: Work incentives are closely related to production performance. This paper presents evidence that the value added of a firm increases when relative labor costs rise, or the level of unemployment increases. Both circumstances imply evidence in favor of the efficiency wage model. This theory is consistent with the views of many managers and personal administrators, who tend to ascribe primary importance to wage setting as an incentive to increase effort. We use a micro panel data set of Spanish manufacturing firms, during the period 2004–2009, to simultaneously estimate a stochastic frontier of a firm’s value added and the inefficiency determinants. The data source is published in the Spanish Industrial Survey on Business Strategies (Encuesta sobre Estrategias Empresariales, ESEE), collected by the Fundación SEPI.

Keywords: efficiency; value added; labor economic; industrial relations. (search for similar items in EconPapers)
JEL-codes: D2 J23 J24 L60 (search for similar items in EconPapers)
Date: 2013-04-22
New Economics Papers: this item is included in nep-eff, nep-hrm and nep-lma
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Related works:
Journal Article: Work Incentive and Productivity in Spain (2016)
Working Paper: Work incentive and productivity in Spain (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:46487

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