The efficiency wage hypothesis : a mesoeconomic analysis / Wenli Cheng and Haiyang Xu Cheng, Wenli

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Author
Cheng, Wenli
Appears In
Journal of Economic Behavior & Organization
Subjects
Wages and labor productivity.; Unemployment - Australia.; Unemployment
Audience
Academic
Summary
In this paper, we apply the mesoeconomic approach to examine the efficiency wage hypothesis. With the traditional formulation of the efficiency wage hypothesis, we show that under certain conditions, the economy has a continuum of equilibria and that nominal shocks can have real effects depending on the firms' expectations. With a modified formulation of the efficiency wage hypothesis, we capture the weak positive correlation between real wage and employment and show that nominal shocks may have real effects in an economy without a continuum of equilibria.
Bookmark
http://trove.nla.gov.au/work/229430
Work ID
229430

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