Dundee Discussion Papers in Economics 266: Slowing down

Yu-Fu Chen, Gylfi Zoega (Lead / Corresponding author)

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    Abstract

    We extend the efficiency wage model of Shapiro and Stiglitz to account for the observation that workers’ effort has a tendency to fall when they approach the end of their employment contract. In particular, we find that the efficiency wage increases when the end of term approaches for a given rate of unemployment. We draw implications for the behavior of workers who are approaching retirement, temporary employment contracts, and the advance notice of impending job loss.
    Original languageEnglish
    PublisherUniversity of Dundee
    Number of pages13
    Publication statusPublished - Jun 2012

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.266
    ISSN (Print)1473-236X

    Keywords

    • wage setting
    • shirking
    • finite horizons

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