Employment Protection And Unemployment In An Efficiency Wage Model

Known for his seminal work in efficiency-wage theory, Andrew Weiss surveys recent research in the field and presents new results. He shows how wage schedules affect the kinds of workers a firm employs and how well those workers perform on the job. Using straightforward examples, he demonstrates how efficiency-wage theory can explain labor market outcomes and guide government policy. There is a separate section of applications to less developed countries. "Efficiency-wage models represent one of the most important developments in economic theory of recent years. They have, at last, provided integrated explanations both of macroeconomic phenomena, such as unemployment and wage rigidity, and microeconomic phenomena, such as wage dispersion. Weiss--one of the pioneers of efficiency-wage theory--provides here a masterful survey, a lucid and systematic and yet critical account of this rapidly developing branch of economics. This book should be required reading in all courses in macroeconomics."--Joseph Stiglitz, Stanford University "Efficiency Wages should be on the bookshelf of all labor and macroeconomists."--Lawrence H. Summers, Harvard University "A splendid monograph ... most readable... I will put it on my reading list."--Partha Dasgupta, Stanford University Originally published in 1991. The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

A New Efficiency Wage Guide That Will Give You ALL You Want To Know. There has never been a Efficiency Wage Guide like this. It contains 36 answers, much more than you can imagine; comprehensive answers and extensive details and references, with insights that have never before been offered in print. Get the information you need--fast! This all-embracing guide offers a thorough view of key knowledge and detailed insight. This Guide introduces what you want to know about Efficiency Wage. A quick look inside of some of the subjects covered: Job creation, Involuntary unemployment - Explanations, George Akerlof - Bibliography, Theory of the firm - Other models, Agency Theory, Principal-agent problem - Deferred compensation, Outline of economics - General economic concepts, History of macroeconomic thought - Efficiency wages, Efficiency - In economics, Paul Milgrom - Labor Markets, Union threat model, Market equilibrium - Interpretations, Opportunism - Economic opportunism, Types of unemployment, Index of economics articles - E, Efficiency wages - Overview, Employment Protection Legislation - On firm efficiency and profits, Compensating differential - Area characteristics, Market-clearing - On market clearing, JEL classification codes - Labor and demographic economics JEL: J Subcategories, New Keynesian economics - Microfoundations of price stickiness, Agency Theory - Employment contract, Principal-agent - Deferred compensation, Unemployed, Classical unemployment, Employment gap, Equilibrium (economics) - Interpretations, Feminist economics - Homo economicus, Unemployment rate, Efficiency wages - Labor turnover, Principal-agent problem, Cyclical unemployment, Union threat model - Empirical literature, Principal-agent problem - Deferred compensation, Efficiency wages - Shirking, History of macroeconomic thought - Labor market failures, and much more...

The contributors explore the reasons why involuntary unemployment happens when supply equals demand.

This chapter has set out in detail the models which are employed below in order to analyse the labour market effects of changes in tax rates and in alterations in the tax structure. The fundamental mechanisms underlying the different approaches have been pointed out. Moreover, vital assumptions have been emphasised. By delineating the models which are used for the subsequent analyses, implicitly statements have also been made about topics or aspects which this study does not cover. For example, all workers and firms are identical ex ante. However, ex-post differences are allowed for, inter alia, if unemploy ment occurs or if some firms have to close down. These restrictions indicate areas of future research insofar as that the findings for homogeneous workers or firms yield an unambiguous proposal for changes in tax rates or the tax structure in order to promote employment. This is because it would be desir able for tax policy to know whether the predicted effects also hold in a world with ex-ante heterogeneity. Furthermore, the product market has not played a role. Therefore, repercussions from labour markets outcomes on product demand - and vice versa - are absent. 55 Moreover, neither the process of capital accumulation, be it physical or human capital, nor substitution pos sibilities between labour and capital in the firms' production function are taken into account. Finally, international competition is not modelled.

This paper updates the Shapiro-Stiglitz (1984) efficiency wage model with technical progress. Involuntary unemployment may not necessarily exist in a long-run equilibrium even when efficiency wages resulting from competitive markets are paid. The effect of reducing real (monetary) unemployment benefits has an ambiguous (possibly negative) impact on employment. The implications of incorporating Okun's (1962) Law into the model are also briefly considered. Institutional factors that may cause involuntary unemployment are also discussed (intellectual property rights regimes and labour market restrictions, such as the minimum wage). Some behavioural perspectives that accord with the model are discussed. This updated model also serves as a (weak) theoretical defence of the Universal Basic Income (UBI) in terms of its potential impact on involuntary unemployment. For a UBI to be implemented, there must be a holistic reconsideration of intellectual property rights regimes (as well as other impediments to technical progress) as well as labour market restrictions. It is suggested that the UK's 'Productivity Puzzle' could be explained through this model (through constrained technical progress, labour market restrictions, unemployment benefits etc.).

Shaping the views of scholars and policymakers on how to address unemployment, the contributions of Layard and Nickell have served to illuminate the policy discourse in Europe. The book includes their key writings on the subject together with a new essay on what should be done during recession.