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Monitoring ’lemons’: why lower productivity workers are sometimes monitored more closely

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  • Marcus Dittrich
  • Silvio Städter

Abstract

We analyse workplace monitoring in a principal–agent model with two types of workers who differ in their productivity. The firm decides on the effort level, the wage and the monitoring intensity for both workers. We find that the elasticities of the workers’ effort-cost function and the firm’s monitoring-cost function affect the firm’s monitoring intensity. Our results imply that the firm might monitor the low-productive worker more closely than the high-productive worker.

Suggested Citation

  • Marcus Dittrich & Silvio Städter, 2021. "Monitoring ’lemons’: why lower productivity workers are sometimes monitored more closely," Applied Economics Letters, Taylor & Francis Journals, vol. 28(9), pages 737-741, May.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:9:p:737-741
    DOI: 10.1080/13504851.2020.1776826
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    References listed on IDEAS

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    1. Schmitz, Patrick W., 2005. "Workplace surveillance, privacy protection, and efficiency wages," Labour Economics, Elsevier, vol. 12(6), pages 727-738, December.
    2. Magnus Allgulin & Tore Ellingsen, 2002. "Monitoring and Pay," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 201-216, Part.
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