Wages, effort and productivity

Empirical analyses of longitudinal data on some 66 manufacturing companies on Britain lead us to the following three conclusions. First, agreed reductions in restrictive work practices lead to increases in productivity. Second, controlling for such agreed reductions, there is some weak evidence that both relative pay and aggregate labour market slack have some positive impact on productivity. Third, falls in market share or declines in the financial health of companies lead to both lower pay rises and reductions in restrictive practices.