... as a worker discipline device." In attempting to answer this question Carl Shapiro and Joseph Stiglitz point out that we need to revert back to examing human nature itself, Humans will want to shirk as much work as possible.If they know they can get away with it then they will continue to shirk their work.Firms have to come up with a response to this problem they face of having workers know they can shirk putting in effort on the job. If an employee can be dismissed from a job and move directly into another one(as is this case when there is an equilibrium wage)then there is no case for an employee to fear being fired and thus can shirk as much as he likes.Therefore only using dismissal as a worker discipline device proves futile in a perfectly competitive labour market.Unless offcourse there is fear that another job will prove difficult to ...

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