Efficiency Wage Models of the Labor Market

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George A. Akerlof, Janet L. Yellen
Cambridge University Press, Nov 28, 1986 - 178 pages
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One of the more troubling aspects of the ferment in macroeconomics that followed the demise of the Keynesian dominance in the late 1960s has been the inability of many of the new ideas to account for unemployment remains unexplained because equilibrium in most economic models occurs with supply equal to demand: if this equality holds in the labor market, there is no involuntary unemployment. Efficiency Wage Models of the Labor Market explores the reasons why there are labor market equilibria with employers preferring to pay wages in excess of the market-clearing wage and thereby explains involuntary unemployment. This volume brings together a number of the important articles on efficiency wage theory. The collection is preceded by a strong, integrative introduction, written by the editors, in which the hypothesis is set out and the variations, as described in subsequent chapters, are discussed.
 

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Contents

The Theory of Underemployment in Densely Populated Backward Areas
22
Another Possible Source of Stickiness
41
Equilibrium Unemployment as a Worker Discipline Device
45
Involuntary Unemployment as a PrincipalAgent Equilibrium
57
Labor Contracts as Partial Gift Exchange
66
A Model of the Natural Rate of Unemployment
93
Job Queues and Layoffs in Labor Markets with Flexible Wages
102
Hierarchy Ability and Income Distribution
115
Incentives Productivity and Labor Contracts
135
Work Incentives Hierarchy and Internal Labor Markets
157
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About the author (1986)

George Arthur Akerlof is an American economist and Koshland Professor of Economics at the University of California, Berkeley. Akerlof received his Bachelor's degree from Yale University in 1962, and his Ph.D. from MIT in 1966, and has taught at the London School of Economics. Akerlof won the 2001 Nobel Prize in Economics (shared with Michael Spence and Joseph E. Stiglitz). and is perhaps best known for his article, "The Market for Lemons: Quality Uncertainty and the Market Mechanism", published in Quarterly Journal of Economics in 1970. Akerlof's authored book titles include: An Economic Theorist's Book of Tales (Cambridge University Press, 1984), Explorations in Pragmatic Economics (Oxford University Press, 2005), and Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (Princeton University Press, 2009).

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