Calculating the price of worker reliability

Melvyn G. Coles, John G. Treble

Research output: Contribution to journalArticlepeer-review

Abstract

We show why variations in the rate of absenteeism might be expected as an equilibrium phenomenon. Managers may be content with a situation in which a large and stable proportion of their contracted workers do not attend work regularly. Further, we establish an equilibrium framework in which firms who require better attendance rates at work pay higher wages. In this way, we can attempt to explain some of the wage variation observed in the labour market, but, more importantly, we can provide a new vehicle for analysing the structure of absence rates across plants, across firms and across industries. The paper also introduces a measure of the cost of absenteeism that is a more useful guide to effective managerial action than the commonly used total cost concept.

Original languageEnglish (US)
Pages (from-to)169-188
Number of pages20
JournalLabour Economics
Volume3
Issue number2
DOIs
StatePublished - Sep 1996

Keywords

  • Absenteeism
  • Contracts
  • Shadow pricing
  • Technology

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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