
doi: 10.2307/3440797
We investigate the absence behaviour of workers when there is asymmetric information regarding worker health. An individual's health is assumed to be private information to that individual and only observable to a third party at cost. Our aim is to complement the existing, largely empirical, studies of absence behaviour, which have tended to treat the phenomenon exclusively as a labour supply decision on the part of workers; cf. Allen (1981), Barmby and Treble (1991), Barmby, Orme and Treble (1991) and Dunn and Youngblood (1986). Our approach is to draw out the interactive aspects of the employment relationship. We assume that workers are ex ante uncertain as to their state of health and supply labour on the basis of an "all or nothing" utility maximising decision taken once a realisation of this state has been received. Utility is a function of income, leisure and health, and workers value leisure more the "sicker" they are. Firms are able to exert some control over individual behaviour by monitoring workers and threatening to fire "shirkers", that is, workers absenting themselves with "unacceptable" sickness. Our model highlights an efficiency wage effect through which wages may be used as a method of absence control. In particular, the optimal response of the firm to an increase in the cost of monitoring is to discourage shirking by raising wages. Furthermore, to the extent that
Labor market, contracts
Labor market, contracts
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