IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-08j50001.html
   My bibliography  Save this article

Different times, different commitments, but the same old practices: failure of the efficiency wage model for socially devoted firms

Author

Listed:
  • Fernando Zanella

    (Dept. of Economics & Finance, United Arab Emirates University)

Abstract

After the stabilization plan of 1994, and trade liberalization, the Brazilian inflation rate ped from two figures monthly to a single one annually. Several large capitalization firms began adhering to the Annual Social Audit disclosures, a series of internal and external indicators mostly related to employees' well-being and community. In this paper, we tested the Efficiency Wage Model, shirking version, as per Manchin & Manning (1992) and applied by Kitazawa & Ohta (2002). We observed 84 firms who were members of the Annual Social Audit network from 1997 to 2005. We find that (i) our studied firms are not paying salaries above market level, as indicated by the efficiency wage model, and (ii) the results suggest the use of the bargain model of repetitive negotiation between employers and employees.

Suggested Citation

  • Fernando Zanella, 2008. "Different times, different commitments, but the same old practices: failure of the efficiency wage model for socially devoted firms," Economics Bulletin, AccessEcon, vol. 10(9), pages 1-6.
    • Handle: RePEc:ebl:ecbull:eb-08j50001
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2008/Volume10/EB-08J50001A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nicolas Sanz & Jean-Christophe Pereau, 2006. "Trade unions, efficiency wages and employment," Economics Bulletin, AccessEcon, vol. 10(4), pages 1-8.
    2. Machin, Stephen & Manning, Alan, 1992. "Testing Dynamic Models of Worker Effort," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 288-305, July.
    3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    4. Arbache, Jorge Saba & Dickerson, Andy & Green, Francis, 2004. "Assessing the stability of the inter-industry wage structure in the face of radical economic reforms," Economics Letters, Elsevier, vol. 83(2), pages 149-155, May.
    5. Faria, Joao Ricardo, 2000. "Supervision and effort in an intertemporal efficiency wage model: the role of the Solow condition," Economics Letters, Elsevier, vol. 67(1), pages 93-98, April.
    6. Yoshitsugu Kitazawa & Makoto Ohta, 2002. "Testing the shirking version of the efficiency wage model in Japanese electric-machinery firms: a panel data approach," Applied Economics Letters, Taylor & Francis Journals, vol. 9(5), pages 335-338.
    7. Jon Strand, 2003. "Wage Bargaining Versus Efficiency Wages: A Synthesis," Bulletin of Economic Research, Wiley Blackwell, vol. 55(1), pages 1-20, January.
    8. repec:ebl:ecbull:v:10:y:2006:i:4:p:1-8 is not listed on IDEAS
    9. Esteves, Luiz Alberto, 2006. "Uma Nota sobre Intensidade de Supervisão nas Indústrias Brasileiras," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 60(3), February.
    10. Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
    11. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    12. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:10:y:2008:i:9:p:1-6 is not listed on IDEAS
    2. Carol Propper & John Van Reenen, 2010. "Can Pay Regulation Kill? Panel Data Evidence on the Effect of Labor Markets on Hospital Performance," Journal of Political Economy, University of Chicago Press, vol. 118(2), pages 222-273, April.
    3. Carlsson, Mikael & Eriksson, Stefan & Gottfries, Nils, 2006. "Testing Theories of Job Creation: Does Supply Create Its Own Demand?," Working Paper Series 194, Sveriges Riksbank (Central Bank of Sweden).
    4. Dutta, Nabamita & Kar, Saibal, 2018. "Relating rule of law and budgetary allocation for tourism: Does per capita income growth make a difference for Indian states?," Economic Modelling, Elsevier, vol. 71(C), pages 263-271.
    5. Fredrik Carlsen & Kåre Johansen & Knut RØed, 2006. "Wage Formation, Regional Migration and Local Labour Market Tightness," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 423-444, August.
    6. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2015. "Fiscal decentralization and regional disparities: The importance of good governance," Papers in Regional Science, Wiley Blackwell, vol. 94(1), pages 89-107, March.
    7. Sabien Dobbelaere & Jacques Mairesse, 2010. "Comparing Micro-evidence on Rent Sharing from Three Different Approaches," NBER Working Papers 16220, National Bureau of Economic Research, Inc.
    8. Subha Mani, 2012. "Is there Complete, Partial, or No Recovery from Childhood Malnutrition? – Empirical Evidence from Indonesia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(5), pages 691-715, October.
    9. Muinelo-Gallo, Leonel, 2022. "Business cycles and redistribution: The role of government quality," Economic Systems, Elsevier, vol. 46(4).
    10. Nabamita Dutta & Deepraj Mukherjee, 2018. "Can financial development enhance transparency?," Economic Change and Restructuring, Springer, vol. 51(4), pages 279-302, November.
    11. García-Mainar , Inmaculada & Montuenga-Gómez , Víctor M., 2012. "Wage dynamics in Spain: evidence from individual data (1994-2001)," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 41-58.
    12. Francis Teal & Måns Söderbom, 2002. "Does firm size really affect earnings?," Economics Series Working Papers WPS/2002-08, University of Oxford, Department of Economics.
    13. Bienvenido Ortega & Jesús Sanjuán & Antonio Casquero, 2019. "Illicit Financial Flows: Another Road Block to Human Development in Low- and Middle-Income Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(3), pages 1231-1253, April.
    14. Michele Battisti & Giovanna Vallanti, 2013. "Flexible Wage Contracts, Temporary Jobs, and Firm Performance: Evidence From Italian Firms," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(3), pages 737-764, July.
    15. Henry Laverde-Rojas & Juan C Correa & Klaus Jaffe & Mario I Caicedo, 2019. "Are average years of education losing predictive power for economic growth? An alternative measure through structural equations modeling," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-21, March.
    16. Heid, Benedikt & Larch, Mario, 2012. "Migration, trade and unemployment," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-40.
    17. Osvaldo Lagares, 2016. "Capital, Economic Growth and Relative Income Differences in Latin America," Discussion Papers 16/03, Department of Economics, University of York.
    18. Lusine Lusinyan & Leo Bonato, 2007. "Work Absence in Europe," IMF Staff Papers, Palgrave Macmillan, vol. 54(3), pages 475-538, July.
    19. Minoiu, Camelia & Reddy, Sanjay G., 2010. "Development aid and economic growth: A positive long-run relation," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 27-39, February.
    20. Christian Pfeifer, 2009. "Fixed‐term Contracts and Employment Adjustment: An Empirical Test of the Core–Periphery Hypothesis Using German Establishment Data," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 92-107, March.
    21. Mani, Subha & Hoddinott, John & Strauss, John, 2010. "Long-term impact of investments in early schooling," IFPRI discussion papers 981, International Food Policy Research Institute (IFPRI).

    More about this item

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-08j50001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.