262 QUARTERLY JOURNAL OF ECONOMICS In the introduction to the reprinted edition of Mathews Donald Roy, a sociologist known for his own worker participant observations of restriction in a machine shop relates a story from his own experience [1952]. A machine crew were discontent because of what they considered an unfair ratio between wages and profits A laminating machine in this factory apparently had extremely odd performance: it would operate perfectly for a long time and then go mysteriously awry. Sheets of heavy paper in the process of lamina- tion would suddenly tear and stick to the machine' s rollers, necessi- tating difficult and sticky work to unwrap the material. The crew operating the machine was putting too much stress on it, causing the paper to tear and stick. despite the necessity of cleaning the rollers(an unpleasant job relative to tending the working machine they considered this operation worthwhile to redress their griev ances [Roy, 1969, p. xxiv]. The preceding story illustrates that workers reduce their effective labor power if they feel they getting less than they deserve. It also indicates that they may feel that they deserve a wage higher than that required to induce them to be physically present at their jobs; further, the remuneration of dissimilar agents-in this case the profit earners--enters their calculation of their fair wage Studies by Mathewson and Roy are examples of the work of the uman relations school of organization. according to this school of thought, workers have considerable control over their own effort and output. This ability of workers to exercise control over their effort, and their willingness to do so in response to grievances, underlies the fair wage-effort hypothesis. A recent report in The New York Times [Salpukas, 1987] concerns the problems generated by two-tier wage systems. Despite the considerable savings in labor costs, many of the companies that adopted such systems are now phasing them out due to the resentment of employees on the job as well as the high turnover generated by the low wages. These wage systems have"produced a resentful class of workers who in some cases are taking their hostility out on s""[Salpukas, 1987, p. 1] " The attitude on the airplane can be a big problem, "said Pat A. Gibbs, the head of the Association of Professional Flight Attendants, which represents the tenants at American [Airlines] "You can tell that the anger is there. " Robert L. Crandall, American's chairman and chief executive, acknowledged in a recent speech that quality of service has suffered because of the pressures that deregulation has The lower-paid workers often do just what is required and no more, and sometimes refuse to help the higher-paid workers.. 'Having people work side by