Is there a trade-off between supervision and wage? Evidence from a metal mechanical firm in southern Brazil

Abstract

The objective of this work was to test the existence of a trade-off between supervision and wages in a metal mechanical firm in Southern Brazil. The methodology used to assess the effects on productivity and the worker efficiency was the differences-in-differences estimator. Evaluating the results, it was found that with increased supervision, there was an increase in productivity ranging between 13.5% and 26.8%. Therefore, with increased productivity, the company has to choose between increasing the level of supervision, at a cost of US$ 624.98 or practicing efficiency wages at a cost of US$ 2,907.72.

Keywords

• Efficiency wages. Supervision. Insider Econometrics.