dc.description.abstract | Traditionally, economists consider the psychological capital as an unmeasured capital. Accordingly, few have focused on the possible relationship emerged between psychological capital, wages and work effort. The main goal of this paper is to investigate the above relationship. By doing so, it aims to understand factors that could induce an employee’s work effort. We use the performance appraisal form, the job application form, personnel files and the wage rate data of a multi-national enterprise for the empirical study, which includes samples from a China factory and a Taiwan factory. Without taking the psychological capital into account, we first employ a two-equation simultaneous model to describe the relationship between wages and work effort under the consideration of the efficiency wages. We then include the psychological capital to the simultaneous system to examine its impact on wage determination and work effort. As such, the omitted variable problem can be solved to guarantee the consistent estimation result. Empirically, it is found that the efficiency wage theory is partly supported in this case. A further study by separating Taiwanese and Chinese samples reveals that the prediction of the efficiency wage theory is not supported by Taiwanese data, but is partly supported by the Chinese data. Therefore, by offering a wage rate higher than a worker’s expectation could extract a higher effort from a Chinese worker. Second, psychological capital is found to be significantly positive correlated with workers’ performance. However, the inclusion of the psychological capital in the model would decline the impact of the efficiency wage on a worker’s performance. Hence, we concluded that not only the efficiency wage but also the psychological capital are crucial in enhancing a worker’s productivity. In other words, in the viewpoint of the employer of this specific corporation, to hire a worker of good psychological capital matching with the corporation’s culture is an important human resource practice. | en_US |