Ariane Breitfelder () (Department of Economics, University of Munich) Udo Broll () (Department of Economics, Dresden University of Technology) Kit Pong Wong () (School of Economics and Finance, University of Hong Kong)
Abstract
This paper places the competitive firm under output price uncertainty in a standard efficiency wage model, wherein the work effort of labor depends on the wage rate set by the firm. Irrespective of the availability of a commodity futures market, we show that the Solow condition holds in that the equilibrium effort-wage elasticity is unity. The optimal wage rate is preference-free and independent of the underlying output price uncertainty under the efficiency wage hypothesis. Furthermore, we show that the introduction of the commodity futures market induces the firm to hire more labor and thereby produce more output if the firm is sufficiently risk averse.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Volume (Year): 21 (2008) Issue (Month): 2 (Autumn) Pages: 118-123 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
For technical questions regarding this item, or to correct its listing, contact: (Helinä Laakkonen).
Related research
Keywords:
Find related papers by JEL classification: D21 - Microeconomics - - Production and Organizations - - - Firm Behavior J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Broll, Udo & Wong, Kit Pong & Zilcha, Itzhak, 1999.
"Multiple Currencies and Hedging,"
Economica,
London School of Economics and Political Science, vol. 66(264), pages 421-32, November.
[Downloadable!] (restricted)
Kit Pong Wong, 2003.
"Export Flexibility And Currency Hedging,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1295-1312, November.
[Downloadable!] (restricted)