The Fair Wage-Effort Hypothesis and Unemployment
This paper introduces the fair wage-effort hypothesis and explores its implications. This hypothesis is motivated by equity theory in social psychology and social exchange theory in sociology. According to the fair wage-effort hypothesis, workers proportionately withdraw effort as their actual wage falls short of their fair wage. Such behavior causes unemployment and is also consistent with observed cross-section wage differentials and unemployment patterns. Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 105 (1990)
Issue (Month): 2 (May)
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