*Swedish Institute for Social Research, Stockholm University, Stockholm, Sweden. I would like to thank participants in the seminars at the Swedish Institute for Social Research and, in particular, Anders BjoUrklund, Carl le Grand, Eugenia Kazamaki, and Eskil Wadensjö for valuable suggestions and discussions. I am also indebted to Nils Gottfries, Bertil Holmlund, Mats Kinnwall, Per Lundborg, two anonymous referees, and the editor of this journal for very useful comments.
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Compensating Wage Differentials versus Efficiency Wages: An Empirical Study of Job Autonomy and Wages
Article first published online: 1 MAY 2008
DOI: 10.1111/j.1468-232X.1994.tb00338.x
Issue
1468-232X/asset/cover.gif?v=1&s=d7541eb76fe8468aa3a20edb8f462cd90041891d "Industrial Relations: A Journal of Economy and Society")
Industrial Relations: A Journal of Economy and Society
Volume 33, Issue 2, pages 249–262, April 1994
Additional Information
How to Cite
ARAI, M. (1994), Compensating Wage Differentials versus Efficiency Wages: An Empirical Study of Job Autonomy and Wages. Industrial Relations: A Journal of Economy and Society, 33: 249–262. doi: 10.1111/j.1468-232X.1994.tb00338.x
Publication History
- Issue published online: 1 MAY 2008
- Article first published online: 1 MAY 2008
- Abstract
- References
- Cited By
Efficiency wage theory as incorporated in the shirking model predicts that firms may substitute wage premiums for costly monitoring. This means that wage premiums should be expected for loosely monitored workers. By regarding extensive monitoring as a lack of job autonomy, efficiency wage theory predicts a positive relation between autonomy and wages. The theory of compensating wage differentials, however, predicts a negative relation between autonomy and wages. When workers prefer autonomous jobs, employers have to offer higher wages for less autonomous jobs in order to recruit labor.
Swedish micro data are analyzed in order to examine the predictions of these theories. A proxy for the monitoring problem of the firm measures workers' possibilities of effort variation. Since this proxy is autonomy, it enables us to test the two rival hypotheses on the relation between job autonomy and wages. We find a positive relation in the private sector as predicted by the efficiency wage hypotheses and a negative relation in the case of the public sector, which accords with the theory of compensating wage differentials.