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An Interplant Test of the Efficiency Wage Hypothesis
Cappelli, Peter ; Chauvin, Keith
Cappelli, Peter
Chauvin, Keith
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Abstract
The analysis that follows tests the shirking model of efficiency wages by
examining the relationship between rates of employee discipline and relative wage
premiums across plants within the same firm. The structure of this data set controls
for many of the problems that confound other tests of efficiency wage arguments,
and the results suggest that greater wage premiums are associated with lower levels
of shirking as measured by disciplinary dismissals. Shirking and discipline are also
lower where conditions in the labor market raise the costs associated with shirking
by making it more difficult to find alternative employment. It is less clear, however,
whether the wage in this case is necessarily efficient in the sense of generating
reductions in discipline sufficient to offset the costs of the wage premium.
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© 1991 by the President, and Fellows of Harvard College and the Massachusetts Institute of
Technology.
Date
1991-08
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Massachusetts Institute of Technology Press
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Cappelli, Peter, and Kevin Chauvin. (1991) An Interplant Test of the Efficiency Wage Hypothesis. Quarterly Journal of Economics, 106, 769-787. http://dx.doi.org/10.2307/2937926