Intertemporal Substitution of Effort: Some Empirical Evidence

The labour economics literature refers often to effort, but there is little empirical evidence as to how productivity and effort respond to wage rate variations. An unusual natural experiment in which wage rates suffered an exogenous change of two weeks' duration gives some insight into the magnitude of this effect. For a group of workers in Victorian County Durham, the effort response, measured as the impact of a temporary wage rate change on output per shift, dominates the response of attendance. Comparison of the estimates presented here with those in Treble ("Journal of Economic History", 61, 414-38, 2001) suggests that the effects are short lived. Copyright (c) The London School of Economics and Political Science 2003.