Shirking, standards and the probability of detection

John G. Sessions, John D. Skåtun

Research output: Contribution to journalArticlepeer-review


By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non-shirkers, we show that the uniformly positive (negative) supply-side relationship between wages (unemployment insurance) and effort is no longer guaranteed. Profit maximization on the part of the firm, however, ensures that effort will depend positively (negatively) on wages (unemployment insurance) in equilibrium.

Original languageEnglish
Number of pages16
JournalBulletin of Economic Research
Early online date22 Sept 2017
Publication statusE-pub ahead of print - 22 Sept 2017


  • Efficiency wages
  • J33
  • J41
  • J54
  • Monitoring
  • Standards

ASJC Scopus subject areas

  • Economics and Econometrics


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