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Topic: Efficiency wages

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	EconLog, "Do the Opposite": Efficiency Wages and Incentives for Employer Candor, Bryan Caplan: Library of Economics ...
		Wages do not fall in response to the labor surplus because at lower wages, employees would stop worrying about getting fired and start misbehavin'.
		The fundamental social problem of efficiency wages is that they cause involuntary unemployment.
		Given that the effect is specifically stated as beyond simple supply and demand, I think that efficiency wages must classified as a rent.
	econlog.econlib.org /archives/2005/02/do_the_opposite.html (1729 words)

	[No title] (Site not responding. Last check: 2007-10-20)
		Efficiency wage theory offers several circumstances in which a firm may want to pay workers a wage that is above the market clearing level.
		Efficiency wages are paid to prevent shirking, and may therefore substitute for expenditure on supervision.
		The efficiency wage theory, however, can be a useful instrument to explain the correlation: if there exist difficulties in monitoring employees as firm size grows, it is rational that larger employers pay substantially higher wage relative to small employers (Oi, 1983; Arai, 1994a; Troske, 1999).
	www.missouri.edu /~econprm/temp/literatures_0104.doc (3150 words)

	Highbeam Encyclopedia - Search Results for wages (Site not responding. Last check: 2007-10-20)
		An economist, he joined the faculty of the Univ. of Chicago in 1920; was active as a government adviser, especially on problems of wages and social security; and served (1939-42) as alderman on the Chicago city council.
		The effects of minimum wages on wage dispersion and employment: evidence from the U.K. wages councils.
		An equilibrium theory of wage and employment cyclicality by gender and by industry.
	www.encyclopedia.com /searchpool.asp?target=wages (786 words)

	[No title] (Site not responding. Last check: 2007-10-20)
		Variations of the Efficiency Wage Theories First of all, the shirking version of efficiency wage theories argues that wage differentials between establishments/ industries are reflected by differences in costs/ technologies of monitoring.
		Wages paid by the firm are rather different from efficiency wages in the sense that higher wages needed to accommodate the adjustment do not induce employee productivity to increase.
		Tabulations of the hierarchical rank, which is a key variable for the analysis of efficiency wage theory, are presented in table 1.
	www.missouri.edu /~econprm/temp/Brown_Research.DOC (7529 words)

	The Successes of the Japanese System
		While U.S. economists have argued that unemployment is necessary to moderate wage demands and prevent shirking on the job (Shapiro and Stiglitz, 1984), Japanese workers have been performing with unexcelled efficiency in firms that assure them uninterrupted employment for the duration of their "lifetime" tenure.
		The efficiency wages theory's conclusion that unemployment is needed to deter shirking rests on the assumption that monitoring an employee's performance is difficult and costly.
		Wage differentials by firm size, on the other hand, have been greater in Japan than in the U.S. In Japan this type of wage inequality has been conducive to employee efficiency and hence to growth.
	socrates.berkeley.edu /~iir/research/sloan/chap7/page1.html (3155 words)

	Marshall: Principles of Economics, Book VI, Chapter III: Library of Economics and Liberty
		But most of the facts which they quote relate only to wages reckoned by the day or week: they are only half-facts, and when the missing halves are supplied, they generally support the opposite inference to that on behalf of which they are quoted.
		For it is found that local variations of weekly wages and of efficiency generally correspond: and thus the facts tend to prove the effectiveness of competition, so far as they bear on the question at all.
		In endeavouring to ascertain the real wages of an occupation at any place or time, the first step is to allow for variations in the purchasing power of the money in which nominal wages are returned.
	www.econlib.org /library/Marshall/marP45.html (2625 words)

	Efficiency Wages and Employee Productivity - Associated Content (Site not responding. Last check: 2007-10-20)
		The critique here is that the ability of a firm to increase profits by setting wages at a wage higher than the equilibrium wage may not necessarily apply in other more industrialized labor markets where there is not a strong correlation between worker productivity and their nutritional intake.
		The economic rationale behind a firm making the decision to pay efficiency wages in the above scenario; is that the firms believe that if they pay the subsistence level wage or the market clearing wage, they attract a workforce composed of under – nourished workers who are not productive.
		This is the wage where the marginal cost of increasing the wage exactly equals the marginal gain in the productivity of the firm’s workers.
	www.associatedcontent.com /article/55548/efficiency_wages_and_employee_productivity.html (612 words)

	CEPR Discussion Paper Abstracts
		The missing wage rigidity in general equilibrium models of efficiency wages is an artifact of the external wage reference perspective conventionally adopted by the literature.
		Efficiency wage models based on an internal wage reference perspective are capable of generating strong wage rigidity.
		We propose a structural model of efficiency wages that is broadly consistent with the reported evidence on fairness in labour relations and rent-sharing.
	www.cepr.org /pubs/new-dps/dplist.asp?dpno=4503 (215 words)

	Why wages do not fall in recessions
		Keynes himself thought that workers were so concerned about their wages relative to those at other firms that no company dared to cut pay.
		(Wages might still fall in a recession, though, since workers are more afraid of not finding another job when unemployment rises.) Still others claim that firms implicitly insure workers against a fall in income in exchange for lower long-term average wages.
		Wages are also likely to be less rigid in short-term jobs, where workers do not become attached to their firm.
	cowles.econ.yale.edu /news/bewley/tfb_00-02_wages.htm (841 words)

	Wages \| Business solutions from AllBusiness.com (Site not responding. Last check: 2007-10-20)
		The trade-off between supervision and wages: evidence of efficiency wages from the NLSY.
		Introduction The classical competitive theories of wage determination predict that workers will be paid the value of their marginal product.
		By IsraeliWire.com The average monthly gross wage in September increased slightly to NIS 6,985 ($1,663) with Electric Corp. and Mekorot (water company) employees leading the...
	www.allbusiness.com /wages/3071615-1.html (836 words)

	The Free Liberal: Efficiency Taxes
		The main categories of efficient taxes are user fees, charges based on land value or rent, and charges that compensate for social costs such as pollution and congestion.
		Just as wages which are high enough to prevent inefficient turnover are referred to in economics as "efficiency wages," payments to government, those which have no excess burden and so don't reduce economic productivity, are efficiency taxes.
		But if the payment comes from wages, then the worker has to labor extra hours to pay the tax, reducing leisure, so a poll or head tax is not neutral with regards to the leisure-labor tradeoff.
	www.freeliberal.com /archives/002310.html (1117 words)

	New Keynesian Economics, by N. Gregory Mankiw: The Concise Encyclopedia of Economics: Library of Economics and Liberty
		The influence of wages on worker efficiency may explain the failure of firms to cut wages despite an excess supply of labor.
		Even though a wage reduction would lower a firm's wage bill, it would also—if the theories are correct—cause worker productivity and the firm's profits to decline.
		The elements of new Keynesian economics, such as menu costs, staggered prices, coordination failures, and efficiency wages, represent substantial departures from the assumptions of classical economics, which provides the intellectual basis for economists' usual justification of laissezfaire.
	www.econlib.org /library/Enc/NewKeynesianEconomics.html (2096 words)

	Efficiency Wages and Employee Productivity - Associated Content (Site not responding. Last check: 2007-10-20)
		At the market level wage, workers may not get the necessary nutrients they require in order to carry out the working day’s hard labor and to maintain a healthy lifestyle.
		The critique here is that the ability of a firm to increase profits by setting wages at a wage higher than the equilibrium wage may not necessarily apply in other more industrialized labor markets where there is not a strong correlation between worker productivity and their nutritional intake.
		The economic rationale behind a firm making the decision to pay efficiency wages in the above scenario; is that the firms believe that if they pay the subsistence level wage or the market clearing wage, they attract a workforce composed of under – nourished workers who are not productive.
	associatedcontent.com /article/55548/efficiency_wages_and_employee_p... (464 words)

	[No title]
		As the real wage becomes very high, effort flattens out as it reaches the maximum possible level D. Wage determination in the efficiency wage model 1.
		But the theory implies that the real wage is completely rigid while the data suggests that the real wage moves over time and over the business cycle d.
		A lower real wage in recessions is consistent with the data F. Efficiency wage and the FE line 1.
	www.sonoma.edu /users/e/eyler/304/304lect9.doc (1053 words)

	[No title]
		Firms compete in offering wage packages subject to the constraint that their workers choose not to slack.
		Therefore the wage required to induce non-slacking will be smaller.ðH ð” ð0“Þ½h”¿ÿ ?ð ÿÿÿ»àã33Ì80º___PPT10ë.~iÆ nhåðñ0 ðpðð ð( ð ððX ð Cð¿ÿ(ð°Ð ðÃøð ð SðBø¿ÿ(ð° °0ÐðÃ ø ð¢¨If L = N, a = infinity,.
		The worst that can happen to a worker who shirks on the job is being fired, followed by immediate rehiring because he is still willing to work for the market wage and there is no red-flag on his work history.
	www.uwyo.edu /aadland/classes/econ5110/efficiencywage.ppt (1236 words)

	Lecture 9 Notes
		The efficiency wage model is based on this last idea: firms do not reduce wages in the face of persistent unemployment because to do so would reduce productivity.
		If high wages increase workers' productivity by enough, it could be profitable for an employer to pay wages higher than the market clearing level.
		Paying high wages may also reduce the frequency of quits thereby saving firms the costs of hiring and training new workers.
	www.personal.psu.edu /~dxl31/ec201/lecture9.html (859 words)

	S-WoPEc: Individual Wage Setting, Efficiency Wages and Productivity in Sweden
		The purpose of the present paper is to analyse the consequences of this wage policy shift.
		We show that wage differentiation has had a strong effect on white collar workers’ average wage, and caused a major increase in the wage gap between the aggregates of whitecollar and blue-collar workers.
		The effects of higher wage/fair wage rates were stronger in the late 1990s, when wage differentiation increased more, than in the early 2000s.
	swopec.hhs.se /fiefwp/abs/fiefwp0205.htm (281 words)

	Origin of the Idea (Site not responding. Last check: 2007-10-20)
		The wages of labour are the encouragement of industry, which like every other human quality, improves in proportion to the encouragement it receives.
		At that time it was common to have wages that barely provided for physical subsistence, and often times fathers (the primary wage laborer), would forgo meals so that children could eat.
		Operating during the industrial revolution, a period in which wages were pushed to subsistence, Owen paid his workers significantly more than the prevailing wages of the time, and his mills were both productive and profitable.
	www.mhhe.com /economics/mcconnell15e/student/olc/chap11origin.mhtml (442 words)

	Wages and Unemployment - Cambridge University Press
		This book is concerned with the problem of wage rigidities in macroeconomic theory, and their implications for public policy.
		In this context new findings concerning microeconomic mechanisms likely to account for real wage rigidity, including implicit contract theory, union behaviour and efficiency wage models are reported.
		The effect of efficiency wages on macroeconomic fluctuations is also considered.
	www.cambridge.org /catalogue/catalogue.asp?isbn=0521350573 (214 words)

	Economist's View: Are Efficiency Wages Less Efficient?
		To explain falling wages in the framework of Ford's payment of wages above the market clearing level, another alternative is to turn to efficiency wage theory which explains why firms would pay wages higher than the market-clearing level.
		Apr 5, 2006 6:59:23 AM There is need to visit again the work of Benjamin Friedman who argues not that economic growth is related to a tendency to equity, at least not for a long long while, but that economic growth that is not equitable costs us our social idealism.
		Yes, I agree that advanced global trade is having a impact on U.S. wage levels, including a flattening of efficiency wage offerings.
	economistsview.typepad.com /economistsview/2006/04/are_efficiency_.html (2269 words)

	Weiss, A.: Efficiency Wages: Models of Unemployment, Layoffs, and Wage Dispersion.
		Weiss, A.: Efficiency Wages: Models of Unemployment, Layoffs, and Wage Dispersion.
		He shows how wage schedules affect the kinds of workers a firm employs and how well those workers perform on the job.
		This book should be required reading in all courses in macroeconomics."--Joseph Stiglitz, Stanford University "Efficiency Wages should be on the bookshelf of all labor and macroeconomists."--Lawrence H. Summers, Harvard University "A splendid monograph...
	press.princeton.edu /titles/4844.html (190 words)

	Advanced Macro: Week 11. Efficiency Wages and Unemployment
		However, being unemployed is not the most efficient way of searching (why not?) and it seems implausible that search can explain the increase in the nairu over the 80’s and its subsequent decline in the 90’s.
		In this model the efficiency wage is independent of the level of demand.
		S and S also recommend (not part of model) that it would be optimal to increase demand by a wage subsidy as this would increase both employment and the equilibrium wage.
	www.bath.ac.uk /~hssdac/macro-2001-2/macro-2001-2-week5-efficiency-wages.htm (730 words)

	CEPR Discussion Paper Abstracts
		The aim of this Paper is to introduce endogenous housing consumption in an efficiency wage model in which two cases are considered: very high and zero relocation costs.
		First, in both cases, we are able to totally characterize the efficiency wage for any preferences that are quasi-linear with respect to the composite good consumption.
		Second, in each case, we show how endogenous housing consumption affects the value of the efficiency wage (compared to the case of fixed housing consumption) and demonstrates the existence and the uniqueness of a steady-state equilibrium.
	www.cepr.org /pubs/new-dps/dplist.asp?dpno=4153 (224 words)

	[No title]
		Efficiency Wages in Booms and Recessions EMBED MSDraw.Drawing.8.2 Fear of job loss may help to explain why real wages are procyclical.
		Efficiency Wages help explain some of the characteristics of Business Cycles, but this phenomenon cannot be the source of Business Cycles.
		If the labor market is organized with efficiency wages, they simply add workers, without any need to raise real wages.
	www.econ.ohio-state.edu /mccafferty/econ502/ch11notes.doc (1204 words)

	Efficiency Wages (Site not responding. Last check: 2007-10-20)
		On Jan. 12, 1914, Ford announced it would reduce the shift from 9 hrs.
		to 8 hrs per day and raise the wage from $2.50 to $5.00 a day.
		The policy of substantial wage premiums over the market wage has since become common practice.
	beatl.barnard.columbia.edu /dye/lectures/buslec6/sld015.htm (44 words)

	SSRN-Efficiency Wages and Unemployment in Cities: The Case of High Relocation Costs by Yves Zenou
		We develop an urban model in which all jobs are located in the Central Business District (CBD) and workers, who have high relocation costs, optimally choose their residence between the CBD and the city-fringe.
		In the first one, firms can pay different wages according to residential location (this is referred to as the unconstrained equilibrium) while in the second case, there is a legal constraint that prevents firms to wage-discriminate on the basis of residential location (this is referred to as the constrained equilibrium).
		We show that in the unconstrained equilibrium, the efficiency wage in fact increases with distance to jobs.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=466341 (440 words)

	Efficiency - Wikipedia, the free encyclopedia
		Energy conversion efficiency, desired energy output per energy input
		Thermal efficiency, useful work per the higher heating value of the fuel
		Efficiency (economics), a general term, to capture the amount of waste or other undesirable features
	en.wikipedia.org /wiki/Efficiency (279 words)

	Balanced Trade - Reconsidering the Classics: A new trade theory focused on national wealth.
		To achieve worldwide efficiency, trade must be conducted without regard to national concerns; therefore any temporary imbalance in a country's foreign exchange settlements or domestic living standards is without consequence.
		If country A is four times as efficient as Country B in producing wine while A is only two times as efficient as B in producing cloth, country A will specialize in wine and Country B will specialize in cloth.
		This trade theory is an alternative to the efficiency theory of free trade that is not protectionist, autarchic nor promoting of trade wars: it allows for the benefits from trade while providing a mechanism to reduce trade's occasional harmful consequences.
	www.mkeever.com /essay.html (5976 words)

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