December 2002

IZA DP No. 661: Efficiency Wages and Effort: Are Hard Jobs Better?

revised version published as "Estimating the Shirking Model with Variable Effort" in: Labour Economics, 2007, 14 (3), 623-647

Efficiency wage theory predicts that the wage per unit of effort will be lower in intensively monitored sectors. This wage differential will increase in effort. Using employer-employee matched data from Ghana we provide evidence supporting this hypothesis.