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Work incentive and productivity in Spain

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  • Rosario Sanchez
  • Mª Isabel Pisa

Abstract

Work incentives are closely related with production performance. This paper presents evidence that firm level value added increases when the relative labour cost rises, or the level of unemployment increases. Both facts imply evidence in favour of the efficiency wage model. This theory is consistent with the views of many managers and personal administrator, who tend to ascribe primary importance in wage setting to incentive effort. We use a micro panel data set of Spanish manufacturing firms, during the period 2004–2009, to simultaneously estimate a stochastic frontier of firm’s value added and the inefficiency determinants. The data source is published in the Spanish Industrial Survey on Business Strategies (Encuesta sobre Estrategias Empresariales, ESEE), collected by the Fundación Empresa Pública (FEP). See above See above

Suggested Citation

  • Rosario Sanchez & Mª Isabel Pisa, 2013. "Work incentive and productivity in Spain," EcoMod2013 5668, EcoMod.
    • Handle: RePEc:ekd:004912:5668
    as

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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.
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    5. JosÈ C. FariÒas & Sonia Ruano, 2004. "The Dynamics of Productivity: A Decompostion Approach Using Distribution Functions," Small Business Economics, Springer, vol. 22(3_4), pages 237-251, April.
    6. Alan B. Krueger & Lawrence H. Summers, 1986. "Efficiency Wages and the Wage Structure," NBER Working Papers 1952, National Bureau of Economic Research, Inc.
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    9. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    10. Rosario Sanchez & Luis Toharia, 2000. "Temporary workers and productivity: the case of Spain," Applied Economics, Taylor & Francis Journals, vol. 32(5), pages 583-591.
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    More about this item

    Keywords

    Spain; Impact and scenario analysis; Impact and scenario analysis;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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