Employee Crime and the Monitoring Puzzle | Zendy

William T. Dickens | Zendy; Lawrence F. Katz | Zendy; Kevin Lang | Zendy; Lawrence H. Summers | Zendy

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Employee Crime and the Monitoring Puzzle

Author(s) -

William T. Dickens,

Lawrence F. Katz,

Kevin Lang,

Lawrence H. Summers

Publication year - 1989

Publication title -

journal of labor economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 8.184

H-Index - 109

eISSN - 1537-5307

pISSN - 0734-306X

DOI - 10.1086/298211

Subject(s) - payment , punishment (psychology) , profit (economics) , business , labour economics , economics , microeconomics , finance , psychology , social psychology

The simplest economic theories of crime predict that profit-maximizing firms should follow strategies of minimal monitoring with large penalties for employee crime. We investigate possible reasons why firms actually spend considerable resources trying to detect employee malfeasance. We find that the most plausible explanations for firms' large outlays on monitoring of employees-legal restrictions on penalty clauses in contracts and the adverse impact of harsh punishment schemes on worker morale-are also consistent with the payment of premium (rent-generating) wages by cost-minimizing firms.

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