Workgroups, efficiency wages and work effort.

Economists have recently become interested in the question of work incentives and, specifically, the way in which pay influences work effort and ultimately productivity. This article analyses whether efficiency wages function primarily as a stick, by making termination costly to the employee or carrot by acting as a gift from the firm to workers. There are a number of approaches to the measurement of work effort. This article sets out to find evidence of efficiency wage behavior using micro-level data from a sample of almost 1000 employees from 26 workplaces in Australia and New Zealand.