Pareto Inefficiency of Market Economies: Search and Efficiency Wage Models
AbstractThis paper shows that market economies with search and in which wages are affected by efficiency wage considerations are not constrained Pareto efficient. Wages are not set at Pareto efficient levels, nor is the level of employment (unemployment) Pareto efficient. We identify the nature of the biases and the welfare improving government interventions.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2651.
Date of creation: Jul 1988
Date of revision:
Publication status: published as The American Economic Review, Vol. 78, No. 2, pp. 351-355, (May 1988).
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Other versions of this item:
- Greenwald, Bruce & Stiglitz, Joseph E, 1988. "Pareto Inefficiency of Market Economies: Search and Efficiency Wage Models," American Economic Review, American Economic Association, vol. 78(2), pages 351-55, May.
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