Does the Chinese labour force make sufficient efforts? Empirical evidence using non‐parametric analysis

Abstract

AbstractIn this study, we construct an incentive model under which the optimal wage incentive scheme is a linear contract. This linear incentive contract can induce truth telling by workers about their inefficiency types and promote optimal efforts by them. We use the non‐parametric kernel estimation method to estimate the model primitives to analyse the insufficient efforts in the Chinese labour market. The empirical results based on data collected from the China Health and Nutrition Survey show that efficient male workers in white‐collar occupations do not exert sufficient efforts in the Chinese labour market. And wages for male workers in white‐collar occupations are undervalued.