Efficiency Wages: Variants and Implications

Schlicht, Ekkehart (2016): Efficiency Wages: Variants and Implications. Discussion Papers in Economics 2016-4

Abstract

Wages affect productivity and non-wage costs with important labor market implications. Efficiency wage theories center on these issues. This article provides a brief non-technical overview.

• Item Type: Paper
• Keywords: efficiency wages, selection wages, turnover wages, discipline wages, shirking, size-wage effect, firm-size effect, congestion-wage effect, Reder-competition, discrimination, hiring standards, minimum wage, income taxation
• Faculties: Economics > Munich Discussion Papers in Economics; Economics > Munich Discussion Papers in Economics > Labor; Economics > Chairs > Chair of Institutional Economics (closed)
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: J24, J31, J63, J71, M52, D21, H21, H3
• Language: German

References

Akerlof, G., (1982), “Labor Contracts as Partial Gift Exchange”, The Quarterly Journal of Economics, 97, issue 4, 543-69.

Akerlof, G.A and J. Yellen (eds.) (1986), Efficiency Wage Models of the Labor Market, Cambridge: Cambridge University Press 1986.

Becker, G. and G. Stigler (1974), “Law Enforcement, Malfeasance, and Compensation of Enforcers”, Section III, Journal of Legal Studies, 1-18.

Bulow, J. and L. Summers (1986). “A Theory of Dual Labor Markets with Application to Industrial Policy, Discrimination, and Keynesian Unemployment”, Journal of Labor Economics, vol. 4, issue 3, 376-414.

Büttner, T., P. Jacobebbinghaus and J. Ludsteck (2010), "Occupational Upgrading and the Business Cycle in West Germany". Economics: The Open-Access, Open-Assessment E-Journal, 4 (2010-10): 1—37.

Campbell, Carl M. (1993), “Do Firms Pay Efficiency Wages? Evidence with Data at the Firm Level”, Journal of Labor Economics, Vol. 11, No. 3, 442-470.

Dolton, P., C. and C. Bondibene and J. Wadsworth, (2012), “Employment, Inequality and the UK National Minimum Wage over the Medium Term”, Oxford Bulletin of Economics and Statistics, 74, issue 1, 78-106.

Dube, A. (2015), "The envelope (theorem) please: Profits, efficiency wages, and monopsony", url: http://arindube.com/2015/06/10/the-envelope-theorem-please-profits-efficiency-wages-and-monopsony/, retrieved July 21, 2015.

Fehr, E. and G. Kirchsteiger and A. Riedl (1993), “Does Fairness Prevent Market Clearing? An Experimental Investigation”, The Quarterly Journal of Economics, 108, issue 2, 437-59.

Gintis, H. (1976), “The Nature of Labor Exchange and the Theory of Capitalist Production”, Review of Radical Political Economics, 36-54.

Glaeser E. L, Maré D. C. (2001), "Cities and skills", Journal of Labor Economics 19:316–342.

Hoel, M. (1990), “Efficiency Wages and Income Taxes”, Journal of Economics, 51(1), 89-99.

Katz, L.F. (1986), “Efficiency Wage Theories: A Partial Evaluation”, in S. Fischer (ed.) NBER Macroeconomics Annual 1986. Cambridge, MA: MIT Press

Krueger, A. and L. Summers (1988), “Efficiency Wages and the Inter-Industry Wage Structure”, Econometrica, 56 (2), 259-293.

Leonard, J. (1987), “Carrots and Sticks: Pay, Supervision and Turnover”, Journal of Labor Economics, 1987, vol. 5, issue 4, S136-52.

Manning, A. (2013), Monopsony in Motion: Imperfect Competition in the Labor Market, Princeton University Press.

Mortensen, D. (1970),. "Job Search, the Duration of Unemployment and the Phillips Curve". American Economic Review, 60: 847-862.

OECD (2011), Divided We Stand. Why Inequality Keeps Rising, OECD Publishing, Table 2.4.

Oi, W., and Idson, T. (1999) "Firm Size and Wages", in: Handbook of Labor Economics, volume 3, pp 2165-2214, Amsterdam: Elsevier Science.

Phelps, E. S. (1968), “Money-Wage Dynamics and Labor-Market Equilibrium”, Journal of Political Economy 76 (1968)

Reder, M. W. (1955), “The Theory of Occupational Wage Differentials,” American Economic Review, 45, 833–52.

Reder, M. W. (1964), “Wage Structure and Structural Unemployment”, The Review of Economic Studies, 31, 309–22.

Salop, S. C. (1979), “A Model of the Natural Rate of Unemployment”, American Economic Review 69(1), pp. 117-125.

Schlicht, E (2001), “Job Rents in a Stylized Labor Market”, in S. K. Berninghaus und M. Braulke (eds.), Beiträge zur Mikro- und Makroökonomik, Berlin et al., Springer-Verlag, 409-423.

Schlicht, E. (1978), “Labour Turnover, Wage Structure, and Natural Unemployment”, Journal of Institutional and Theoretical Economics 134, 337-46.

Schlicht, E. (1992), “Wage Generosity”, Journal of Institutional and Theoretical Economics, 148(3), 437-451.

Schlicht, E. (2005), “Hiring Standards and Labour Market Clearing”, Metroeconomica 56(2).

Schlicht, E. (2007), “Wage Dispersion, Over-Qualification, and Reder Competition”. Economics: The Open-Access, Open-Assessment E-Journal, 1 (2007-13): 1—22 (Version 2).

Schlicht, E. (2010), “Selection Wages and Discrimination”. Economics - The Open-Access, Open-Assessment E-Journal, vol. 4, pages 1-30.

Schlicht, E. (2011), “Wage Setting in Modern Labor Markets: Neither Fair Nor Efficient”, IZA Policy Paper No. 26, IZA P.O. Box 7240 53072 Bonn Germanyf.

Shapiro, C. and J. E. Stiglitz, (1984), “Equilibrium Unemployment as a Worker Discipline Device”, American Economic Review, 433-444.

Solow, R. (1979), “Another Possible Source of Wage Stickiness”, Journal of Macroeconomics, 1(1), 79-82.

Spitz-Oener, A. (2006), "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure”, Journal of Labor Economics, vol. 24, no. 2, 235-270.

Stiglitz, J. (1987), "The Causes and Consequences of the Dependence of Quality on Price", Journal of Economic Literature, 25, issue 1, p. 1-48.

Stiglitz, J. E. (1973), “Approaches to the Economics of Discrimination”, American Economic Review, vol. 63, issue 2, 287-95.

Stiglitz, J.(1974), “Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model”, The Quarterly Journal of Economics 88(2) 194-227.

Summers, L. (1988), “Relative Wages, Efficiency Wages, and Keynesian Unemployment” The American Economic Review, Vol. 78, No. 2, 383-388.

Weiss, A. W. (1980), “Job Queues and Layoffs in Labor Markets with Flexible Wages”, Journal of Political Economy 88(3),1980, pp. 526-538.