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

Jean-Pierre Danthine and André Kurmann

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: 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].

Keywords: efficiency wages; wage rigidity; rent-sharing (search for similar items in EconPapers)
JEL-codes: E24 E32 J50 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2004-06, Revised 2005-06
New Economics Papers: this item is included in nep-dge and nep-lab
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Published in Economics Letters, vol.90, 2006, pp. 278-284

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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:04.09

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