Which employers regard the threat of dismissal as a suitable incentive to motivate workers?

ABSTRACT

Using German establishment data, this study finds that the share of blue-collar workers, an outdated production technology and a high-wage policy increase the probability that employers regard the threat of dismissal as a suitable incentive. A participatory human resource management policy, the incidence of a works council and difficulties in filling vacancies decrease the probability.

KEYWORDS:

• Dismissal threat
• efficiency wage
• monitoring
• cooperation
• regulation

JEL CLASSIFICATION:

• J30
• J50
• J60
• M50

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ Note that the theoretical predictions developed in Section II are general and do not depend of a specific point in time. Thus, even though the data set used is from the 1990s, it allows testing these theoretical predictions.