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Dual Labor Markets And Strategic Efficiency Wage

Author

Listed:
  • Mohamed Jellal
  • Francois-Charles Wolff

Abstract

We consider a dual labor markets model in which the primary sector requires the presence of eMiciency wage, while the secondary sector is competitive. We show that the Solow condition does not hold in a Stackelberg equilibrium where the primary sector acts as a leader and the secondary one as a follower.[J41]

Suggested Citation

  • Mohamed Jellal & Francois-Charles Wolff, 2003. "Dual Labor Markets And Strategic Efficiency Wage," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 99-112.
  • Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:99-112
    DOI: 10.1080/10168730300000006
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    References listed on IDEAS

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    1. Albrecht, James W & Vroman, Susan B, 1992. "Dual Labor Markets, Efficiency Wages, and Search," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 438-461, October.
    2. Acemoglu, Daron, 2001. "Good Jobs versus Bad Jobs," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 1-21, January.
    3. Jellal, Mohamed & Zenou, Yves, 2000. "A dynamic efficiency wage model with learning by doing," Economics Letters, Elsevier, vol. 66(1), pages 99-105, January.
    4. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March.
    5. Jacques-François Thisse & Yves Zenou, 1997. "Segmentation et marchés locaux du travail," Économie et Prévision, Programme National Persée, vol. 131(5), pages 65-76.
    6. Lin, Chung-cheng & Lai, Ching-chong, 1994. "The turnover costs and the Solow condition in an efficiency wage model with intertemporal optimization," Economics Letters, Elsevier, vol. 45(4), pages 501-505, August.
    7. Ramaswamy, Ramana & Rowthorn, Robert E, 1991. "Efficiency Wages and Wage Dispersion," Economica, London School of Economics and Political Science, vol. 58(232), pages 501-514, November.
    8. Agenor, Pierre-Richard & Santaella, Julio A., 1998. "Efficiency wages, disinflation and labor mobility," Journal of Economic Dynamics and Control, Elsevier, vol. 22(2), pages 267-291, February.
    9. repec:cor:louvrp:-1306 is not listed on IDEAS
    10. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters,in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290 National Bureau of Economic Research, Inc.
    11. Schmidt-Sorensen, Jan Beyer, 1990. "The equilibrium effort-wage elasticity in efficiency-wage models," Economics Letters, Elsevier, vol. 32(4), pages 365-369, April.
    12. Clark, Andrew E. & Oswald, Andrew J., 1998. "Comparison-concave utility and following behaviour in social and economic settings," Journal of Public Economics, Elsevier, vol. 70(1), pages 133-155, October.
    13. Marti, Christopher, 1997. "Efficiency wages: combining the shirking and turnover cost models," Economics Letters, Elsevier, vol. 57(3), pages 327-330, December.
    14. Faria, Joao Ricardo, 2000. "Supervision and effort in an intertemporal efficiency wage model: the role of the Solow condition," Economics Letters, Elsevier, vol. 67(1), pages 93-98, April.
    15. Wauthy, Xavier & Zenou, Yves, 2002. " How Does Imperfect Competition in the Labor Market Affect Unemployment Policies?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 417-436.
    16. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    17. Jellal, Mohamed & Zenou, Yves, 1999. "Efficiency wages and the quality of job matching," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 201-217, June.
    18. Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
    19. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 111-143, June.
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    Cited by:

    1. repec:ebl:ecbull:v:10:y:2004:i:3:p:1-7 is not listed on IDEAS
    2. Guerrazzi, Marco, 2012. "On involuntary unemployment: notes on efficiency-wage competition," MPRA Paper 38140, University Library of Munich, Germany.
    3. François-Charles Wolff & Mohamed Jellal & Khaled Bouabdallah, 2004. "Unemployment and work sharing in an efficiency wage model," Economics Bulletin, AccessEcon, vol. 10(3), pages 1-7.

    More about this item

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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