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Summer 2020
ISSN 0890-913X
Volume 35, Number 2
Categories: Summer 2020 | Labor Force

Alternatives to Paying Efficiency Wages: Why No PEOPLEFAX?

Robert Tucker Omberg, George Mason University
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/index.php?action=ajax&rs=GDMgetPage&rsargs[]=2020 Journal of Private Enterprise Vol 35 No 2 Summer parte5.pdf&rsargs[]=0
TheJournalofPrivateEnterprise35(2),2020,77–88AlternativestoPayingEfficiencyWages:WhyNoPEOPLEFAX?RobertTuckerOmberg*GeorgeMasonUniversity______________________________________________________AbstractEfficiencywagetheoriesofunemploymentpredictthatemployerswillpayemployeesabovemarket-clearingwagestodetershirkingbyworkers.However,payingsupernormalwagesmaynotbetheonlysolutiontothisproblem.WhentheMontgolfierPaperMillencounteredshirkingandlaborerswho“lefttheiremploy[ers]whentheytriedtodisciplinethem”(Horn,p.37)inthe1780s,theyinsteadmadereforms,themostsignificantofwhichwasthecertificatdecongé,a“recordof[eachemployee’s]previousemploymentandconduct”(Rosenband1993,p.233)maintainedbytheemployer.Underthissystem,theMontgolfierscouldpaynormalmarketwagesandstillcausetheirworkerstoincurpenaltiesforshirking.Legislativebarriersinseveralmodernjurisdictionspreventemployersfromgivingdetailedfeedbackonpastemployeestopotentialemployers.______________________________________________________JELCodes:J00,J53,N00Keywords:efficiencywages,laboreconomics,historyofmanagementI.IntroductionTheexistenceofpersistentinvoluntaryunemploymentisoftencountedamongthemostpuzzlingphenomenainallofeconomics,anditisonewithdireconsequencesforhumanwelfare.Whilemacroeconomicsanalyzeschangesinthelevelofemploymentasaconsequenceoffluctuationsinaggregatedemand,afieldofmicroeconomicanalysispurportstoexplainthefailureoflabormarketstoclearregardlessofcyclicalfluctuations.Thesemicroeconomictheories,knownasefficiencywagetheories,holdthatfirmssetwagesabovethemarket-clearinglevelbecausewagesaffectthequalityoflaboravailabletothefirm.*IthankparticipantsintheAssociationofPrivateEnterpriseEducation’sfortyfourthannualmeeting,aswellasoneanonymousreviewer,fortheirhelpfulfeedback.IamgratefulforsupportfromtheInstituteforHumaneStudies.
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TitleAlternatives to Paying Efficiency Wages: Why No PEOPLEFAX?
Authors/Creators:Robert Tucker Omberg, George Mason University
Year:2020
Volume:35
Number:2
Pages:77 - 88
Publisher:The Association of Private Enterprise Education
ISSN:0890-913X
Document Type:Articles
Keywords:efficiency wages, labor economics, history of management
Citation:
Tucker Omberg, Robert / 2020. "Alternatives to Paying Efficiency Wages: Why No PEOPLEFAX?." The Journal of Private Enterprise, 35(2): 77-88.
The Association of
Private Enterprise Education
Benjamin Powell
Secretary/Treasurer
Texas Tech University
Free Market Institute, Box 45059
Lubbock, TX 79409-5059
E-mail: apee@ttu.edu