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Efficiency Wages Revisited: The Internal Reference Perspective (new version)

  • Jean-Pierre DANTHINE
  • André KURMANN

The missing wage rigidity in general equilibrium models of effciency wages is an artifact of the external wage reference perspective conventionally adopted by the literature. Effciency wage models based on an internal perspective, in which the wage reference is made dependent on the firm's ability to pay, are capable of generating strong wage rigidity. This paper makes the point in the context of the gift-exchange framework originally proposed by Akerlof [1982].

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Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 04.09.

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Length: 8 pages
Date of creation: Jun 2004
Date of revision: Jun 2005
Publication status: Published in Economics Letters, vol.90, 2006, pp. 278-284
Handle: RePEc:lau:crdeep:04.09
Contact details of provider: Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
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