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Efficiency Wage Theory: Evidence For Singapore Manufacturing Sector

Author

Listed:
  • SIN-CHET CHUA

    (Division of Economics, School of Humanities and Social Sciences, College of Humanities, Arts, & Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332, Singapore)

  • YUN-WEN LIM

    (Division of Economics, School of Humanities and Social Sciences, College of Humanities, Arts, & Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332, Singapore)

  • TENG-TENG TER

    (Division of Economics, School of Humanities and Social Sciences, College of Humanities, Arts, & Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332, Singapore)

  • SOON-BENG CHEW

    (Division of Economics, School of Humanities and Social Sciences, College of Humanities, Arts, & Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332, Singapore)

Abstract

This paper attempts to test whether there is econometric evidence in support of the efficiency wage theory in Singapore's manufacturing sector. Two of the possible ways to account for efficiency wages are to show that higher wages have resulted in reduced shirking by workers, and to show that higher wages have resulted in an increase in worker productivity. We find evidence in support of efficiency wages for three out of 18 industries within the manufacturing sector in Singapore based on both ordinary least square (OLS) and 2SLS regression results, and for another two industries based only on OLS and yet another two industries based only on 2SLS.

Suggested Citation

  • Sin-Chet Chua & Yun-Wen Lim & Teng-Teng Ter & Soon-Beng Chew, 2014. "Efficiency Wage Theory: Evidence For Singapore Manufacturing Sector," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(03), pages 1-12.
    • Handle: RePEc:wsi:serxxx:v:59:y:2014:i:03:n:s0217590814500210
    DOI: 10.1142/S0217590814500210
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    References listed on IDEAS

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    1. Wadhwani, Sushil B & Wall, Martin, 1991. "A Direct Test of the Efficiency Wage Model Using UK Micro-data," Oxford Economic Papers, Oxford University Press, vol. 43(4), pages 529-548, October.
    2. N/A, 1974. "Politics in Japan: Some Salient Features," India Quarterly: A Journal of International Affairs, , vol. 30(2), pages 153-156, April.
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    More about this item

    Keywords

    Efficiency wage; shirking model; Singapore manufacturing sector; wages and productivity; JEL Classification: A10; JEL Classification: C25; JEL Classification: E24; JEL Classification: J08; JEL Classification: J30;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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