Affordable Access

Publisher Website

The efficiency wage hypothesis: a mesoeconomic analysis

Authors
Journal
Journal of Economic Behavior & Organization
0167-2681
Publisher
Elsevier
Publication Date
Volume
55
Issue
2
Identifiers
DOI: 10.1016/j.jebo.2003.09.010
Keywords
  • Mesoeconomics
  • Increasing Return
  • Efficiency Wage Hypothesis
  • Unemployment
Disciplines
  • Economics

Abstract

Abstract In this paper, we apply the mesoeconomic approach to examine the efficiency wage hypothesis. With the traditional formulation of the efficiency wage hypothesis, we show that under certain conditions, the economy has a continuum of equilibria and that nominal shocks can have real effects depending on the firms’ expectations. With a modified formulation of the efficiency wage hypothesis and increasing return to scale, we capture the weak positive correlation between real wage and employment and show that nominal shocks may have real effects in an economy without a continuum of equilibria.

There are no comments yet on this publication. Be the first to share your thoughts.