Efficiency-wage Hypothesis and the Operational Production Pattern
An economy’s production set is the collection of all net output vectors that the economy is capable of producing with a given technology and fixed quantities of primary factors of production. The boundary of this set is called the production possibility frontier or PPF. We show that, if the efficiency-wage hypothesis holds, a country’s PPF, though conceptually valid, is an operationally irrelevant concept, because the economy never operates on the PPF, which is a view that ought to be appreciated in light of persistent unemployment in the new structure of economies of the post-21st-Century-crisis world.
|Date of creation:||2011|
|Publication status:||Forthcoming in|
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Web page: http://www.uni-marburg.de/fb02/
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- Egbert, Henrik & Naqvi, Nadeem, 2011.
"Market-dependent production set,"
33829, University Library of Munich, Germany.
- Henrik Egbert & Nadeem Naqvi, 2011. "Market-dependent Production Set," MAGKS Papers on Economics 201145, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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