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Goldsmith, Arthur H.; Veum, Jonathan R.; & Darity, William A., Jr. (2000). Working Hard for the Money? Efficiency Wages and Worker Effort. Journal of Economic Psychology, 21(4), 351-385.


This paper offers a test of the relative wage version of the efficiency wage hypothesis – that firms are able to improve worker productivity by paying workers a wage premium. Psychologists believe work effort reflects motivation that is governed by a feature of personality referred to as locus of control. Measures of locus of control are available in the National Longitudinal Survey of Youth, Using data drawn from the NLSY in 1992 we simultaneously estimate structural real wage and effort equations. We find that receiving an efficiency wage enhances a person's effort and that person's providing greater effort earn higher wages.


Reference Type

Journal Article

Year Published


Journal Title

Journal of Economic Psychology


Goldsmith, Arthur H.
Veum, Jonathan R.
Darity, William A., Jr.