The Public Interest

Microeconomics and the X-Efficiency Theory

Harvey Leibenstein

Special Edition 1980

In a recent biography Eleanor Dulles reports on her experience in a New York hairnet factory circa 1920. "The owner of the factory never came out there, he iust sat in New York and took the money .... The manager was a very sharp type. I told him I could increase production, so I worked out an incentive scheme whereby for a 50 percent increase in production they could make 30 to 40 percent more in wages .... The girls really began to put out. They got very much interested in their work, and the good ones were soon earning 16 dollars and more a week."

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