Modelling Dynamic Incentives and Making Cheaper Peanuts

Tim Barmby, Department of Economics, University of Aberdeen

This paper analyses an overtime rationing scheme which is used to control absenteeism amongst an industrial workforce. The firm bans workers from being eligible for overtime if they have two spells of absence within a 5 week period, bans last for 4 weeks and are non-additive. We outline a method of estimating such dynamic discrete situations and report some preliminary estimates of the structural parameters defining the model.

Date: 06 December-00 0000