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Many jobs serve a social purpose beyond profit maximization, contributing positively to society. This paper uses a modified principal-agent gift-exchange game with positive externality (prosocial treatment) to study how workers' prosocial motivation interacts with the use of efficiency wages in stimulating effort. We find that prosocial motivation and efficiency wages are independent in stimulating effort: compared to a standard gift-exchange game (GE treatment), the presence of the externality shifts the agents' effort choice function upwards without affecting its slope. Thus, if principals were profit-maximizers, wage offers should be the same in both treatments. However, principals offer higher wages in the prosocial treatment. We show that this is due to principals in the GE treatment highly underestimating agents' reciprocity and thereby offering wages below the profit-maximizing level. Results from robustness-checks further suggest that our findings are unlikely to be driven by a simple efficiency effect. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to explore the effects of fiscal policy in an economy with efficiency wages, consumption taxes and a common income tax rate. Design/methodology/approach: A dynamic general-equilibrium model with the government sector is calibrated to Bulgarian data (1999–2018). Two regimes are compared and contrasted – the exogenous (observed) vs optimal policy (Ramsey) case. Findings: The main findings are as follows: (1) The optimal steady-state income tax rate is zero. (2) The benevolent Ramsey planner provides three times lower amount of the utility-enhancing public services. (3) The optimal steady-state consumption tax needed to finance the optimal level of government spending is 18.7%. Originality/value: The focus of the paper is on the relative importance of consumption vs income taxation, as well as on the provision of utility-enhancing public services. Bulgarian economy was chosen as a case study due to its major dependence on consumption taxation as a source of tax revenue. Peer review: The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2021-0488. [ABSTRACT FROM AUTHOR]

We analyze a large, anonymous labour market in which firms motivate their workers via relational contracts. The market is frictionless and features on-the-job search, in that all acceptable vacancies are immediately filled and the employed compete with the unemployed for vacancies. While firms and workers are ex ante identical, the unique equilibrium exhibits a continuous distribution of contracts in which high wage firms have higher retention rates, more motivated workers and higher productivity. The model thus generates dispersion in wages, productivity and human resource strategies, and gives rise to endogenous job ladders. An exogenous increase in on-the-job search increases the quantity of jobs but decreases their quality; with sufficient on-the-job search there is full employment, and wage dispersion rather than unemployment motivates workers.

The objective of this conceptual paper is to analyse why the use of efficiency wages accompanied by informative feedback can be a substitute for the use of individual economic incentives. Efficiency wages lead to the same positive outcomes as these incentives, but without incurring their multiple dysfunctionalities, which are difficult for companies to manage. The research methodology followed is an integrative literature review of different conceptual schools of thought: economics, experimental economics and behavioural economics. The result is the design of a conceptual framework that offers a new perspective on how companies can motive more effectively employees while achieving organisational objectives. Efficiency wages can attract employees that are more productive and motivate them to be more diligent. When accompanied by informative feedback, they can also orientate employees' behaviours towards the achievement of organisational objectives. Efficiency wages fulfil therefore the objectives of incentives, but they are a fairer and less discriminatory alternative. This paper makes two relevant contributions. First, it offers managers an alternative to the use of individual incentives, and a powerful mechanism in the achievement of business excellence. Second, it promotes the academic analysis of novel hypothesis and research perspectives, constituting thus a relevant step for further theory development. [ABSTRACT FROM AUTHOR]

We investigate the nature of the wage–productivity nexus in Poland, considering the validity of the alternative theories of this relationship in the context of a recent hypothesis pointing to the role of multinational corporations (MNCs) in decoupling productivity from wages. Using spatial and nonspatial dynamic panel models, we find indirect support for this hypothesis. Sectors with the highest presence of MNCs tend to have higher labor productivity but lower wages. Unlike productivity, wages are also subject to stronger spatial spillovers, suggesting that they are sometimes set based on their geographic proximity, rather than on workers' productivity. The policy implications of the findings are discussed. [ABSTRACT FROM AUTHOR]

A principal hires an agent to provide a verifiable service. Initially, the agent can exert unobservable effort to reduce his disutility from providing the service. If the agent is free to waive his right to quit, he may voluntarily sign a contract specifying an inefficiently large service level, while there are insufficient incentives to exert effort. If the agent's right to quit is inalienable, the underprovision of effort may be further aggravated, but the service level is ex post efficient. Overall, it turns out that the total surplus can be larger when agents are not permitted to contractually waive their right to quit work. Yet, we also study an extension of our model in which even the agent can be strictly better off when the parties have the contractual freedom to waive the agent's right to quit. [ABSTRACT FROM AUTHOR]

Efficiency wage theories of unemployment predict that employers will pay employees above market-clearing wages to deter shirking by workers. However, paying supernormal wages may not be the only solution to this problem. When the Montgolfier Paper Mill encountered shirking and laborers who "left their employ[ers] when they tried to discipline them" (Horn, p. 37) in the 1780s, they instead made reforms, the most significant of which was the certificat de conge', a "record of [each employee's] previous employment and conduct" (Rosenband 1993, p. 233) maintained by the employer. Under this system, the Montgolfiers could pay normal market wages and still cause their workers to incur penalties for shirking. Legislative barriers in several modern jurisdictions prevent employers from giving detailed feedback on past employees to potential employers. [ABSTRACT FROM AUTHOR]

The interaction among a firm's choices of output, technology, and monitoring intensity is studied in a general equilibrium model. Firms engage in oligopolistic competition, and unemployment is a result of the existence of efficiency wages. The following results are derived analytically. First, an increase in the cost of exerting effort leads a firm to choose a more advanced technology and a lower level of monitoring intensity. Second, an increase in the discount rate does not change a firm's choices of technology and monitoring intensity. Third, an increase in the elasticity of substitution among goods leads a firm to choose higher levels of monitoring intensity and technology. In a model in which the level of monitoring is exogenously given, there is a negative relationship between the wage rate and the monitoring intensity. In this model with endogenously chosen monitoring intensity, the wage rate and the monitoring intensity can move either in the same direction or in opposite directions. [ABSTRACT FROM AUTHOR]

This paper studies how workers' on-the-job search influences optimal incentives in organizations. We analyze a principal-agent model in which the agent multitasks between working for the principal and searching for other job opportunities. The agent partly uses on-the-job search to improve his bargaining position within the relationship. We show that the optimal contract may feature both excessive performance bonuses as well as efficiency wages. Both measures reduce the agent's search incentives, but do not completely eliminate rent-seeking under the optimal contract. On-the-job search therefore generates agency costs. The model suggests a new rational for excessive incentive pay and efficiency wages. [ABSTRACT FROM AUTHOR]

We use 9 years of dynamic panel data (4,090 observations) to explore how decarbonization moderates the association between a selection of efficiency‐driven shop‐floor initiatives and labor productivity. The results are mixed: the relationship between materials efficiency and labor productivity is positively moderated by decarbonization, but the relationship between increases in inventory turnover or the average firm wage as a multiple of average sector wages are negatively moderated by decarbonization. Overall, we find that decarbonization leads to an average drop in sales of 1.8% per worker. This evidence therefore suggests that climate change goals impacting industrial firms might be difficult to accomplish if managers expect to achieve decarbonization for free with current organizational best practices. [ABSTRACT FROM AUTHOR]

Impact of economic integration on unemployment is studied in a general equilibrium model in which unemployment is a result of the existence of efficiency wages. Banks provide capital to manufacturing firms and engage in oligopolistic competition. Manufacturing firms choose technologies and also engage in oligopolistic competition. A country with a more efficient financial sector has a lower unemployment rate and a comparative advantage in producing manufactured goods. Trade integration decreases the unemployment rate and increases the wage rate and the equilibrium level of technology. An additional financial integration will decrease the unemployment rate and increase the wage rate and the level of technology further. [ABSTRACT FROM AUTHOR]

In a Cournot-oligopoly with free but costly entry and business stealing, output per firm is too low and the number of competitors excessive, assuming labor productivity to depend on the number of employees only or to be constant. However, a firm can raise the productivity of its workforce by paying higher wages. We show that such efficiency wages accentuate the distortions occurring in oligopoly. Specifically, excessive entry is aggravated and the welfare loss due to market power rises. [ABSTRACT FROM AUTHOR]

We provide a simple framework that helps explore the need for contingent (teaching) jobs in academia alongside the usual tenured-professorship positions. It also explains the coexistence of these two types of jobs in research universities as an equilibrium phenomenon. Imprecisions in the academic editorial process, combined with the increasing difficulty of producing academic research, is suggested as a possible explanation for the recent increasing trend in the share of non-tenure-track teaching jobs in academia as well as the widening wage gap between tenured-professors and teaching faculty. Alternative interpretations are explored. [ABSTRACT FROM AUTHOR]

I consider an economy growing along the balanced growth path that is hit by an adverse shock to its capital accumulation process. The model integrates efficiency wages due to imperfect monitoring of the quality of labor in a search and matching framework with methods of dynamic general equilibrium analysis. I show that, depending on the firms' abilities to assess workers' performance, the discipline device role of unemployment may account for sharp declines in employment and jobless recoveries driven by exceptional increases in the work effort of employees. The model also explains why rigid real wages may prevail in equilibrium: the large movements in unemployment are indeed associated with real wage rigidity, which is generated endogenously by efficiency wages. [ABSTRACT FROM AUTHOR]

• Technology-enhanced tax enforcement, via the GTP III in China, leads to a significant decrease in efficiency wage payments. • Employees bear a notable fraction of the tax burden from intensified enforcement, affecting their wage structures. • The decrease in efficiency wages is more pronounced in firms with higher labor intensity, greater tax compliance, higher institutional investor ratios, lower levels of political connectedness, and lower job mobility. This paper examines the impact of technology-enhanced tax enforcement on efficiency wages. Using the Golden Tax Project III (GTP III) implementation in China as a quasi-natural experiment and employing the difference-in-differences method, we show GTP III decreases efficiency wage payments, indicating employees bear part of the tax burden from intensified enforcement. The effect is more pronounced in firms with higher labor intensity, greater tax compliance, lower job mobility, higher institutional investor ratio, and lower political connectedness. We show that firms strategically apply wages to accommodate local tax enforcement to maintain their profitability. [ABSTRACT FROM AUTHOR]

In this paper I study the relation between real wage rigidity and nominal price and wage rigidities. We formulate a generalized price-setting framework that incorporates staggered contracts of multiple durations and that enables us to directly identify the influences of nominal vs. real rigidities. We also find that new contracts exhibit very low sensitivity to marginal cost, corresponding to a relatively high degree of real rigidity. For instance, in models focused on labour contracts, wages are regarded as an „insurance” provided by the employer to the workers, while in efficiency wage models, wages are determinants of labour productivity. Such models have the ability to account for unemployment, but they are not able to explain the failure of the classical dichotomy.

The present model embeds a model of intra-industry trade into a labour market, which is characterised by efficiency wages. It is shown that tariff protection of the import competing, home produced brands, may cause the equilibrium unemployment rate to shoot up and instead of protecting the sector may cause it to contract. This is possible when elasticity of demand is high and firms have less market power and thus, protectionist effect of tariffs may get completely reversed. [ABSTRACT FROM AUTHOR]

As a result of its own strategy, gradual development, vertical integration or other factors, a firm may experience employing a worker with some firm-specific human capital. This situation implies a kind of interdependence between the employer and the employee whose knowledge and abilities can be perceived as a specific asset. Both parties become strongly interdependent: the employer has to rely on the employee and, on the other hand, the employee cannot change his workplace easily. The presented relations are compared to a bilateral monopoly situation in order to examine the possibility of using analogous research tools. This paper identifies difficulties accompanying the functioning of the firm, when the core business is based on firm-specific human capital and contains solutions referring to transaction costs economics and the agency theory. [ABSTRACT FROM AUTHOR]

Copyright of Pensamiento Jurídico is the property of Universidad Nacional de Colombia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

By studying a two-sector general equilibrium model in which firms engage in oligopolistic competition and unemployment is a result of the existence of efficiency wages, we derive the following results analytically. A country's comparative advantage in producing manufactured goods increases with the level of efficiencies in the labor market. The opening of international trade leads to the equalization of wage rates even though countries differ in their factor endowments and labor market efficiencies. If countries have the same level of labor market efficiencies but differ in their endowments of labor and land, the opening to international trade leads to an increase in the wage rate in both countries. [ABSTRACT FROM AUTHOR]

ABSTRACT: By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non‐shirkers, we show that the uniformly positive (negative) supply‐side relationship between wages (unemployment insurance) and effort is no longer guaranteed. Profit maximization on the part of the firm, however, ensures that effort will depend positively (negatively) on wages (unemployment insurance) in equilibrium. [ABSTRACT FROM AUTHOR]

This paper analyzes three prominent models of internal references and their impact on wage rigidity (Danthine and Kurmann in Scand J Econ 109(4):857–881, 2007; J Monet Econ 57(7):837–850, 2010; Koskela and Schöb in J Econ 96:79–86, 2009). With one exception, these studies find that internal references, nested in reciprocal worker preferences, unambiguously increase wage rigidity. In contrast to that literature, the present study provides analytical proofs, calibration results as well as impulse response functions which show that the effect of internal references on wage rigidity is in fact ambiguous. Several model extensions are discussed and robustness checks conducted. The intuition for this result is similar in all models: as internal and external references are modeled as weighted average, an increase in the weight on the internal reference implies a simultaneous decrease in the weight on the outside option. Therefore, the effect of the internal reference relative to the external reference determines whether wage rigidity increases or decreases. [ABSTRACT FROM AUTHOR]

In this paper we investigate the quantitative importance of efficiency wages of no-shirking type in explaining business cycle fluctuations in Bulgarian labor markets. This is done by augmenting a relatively standard real business cycle model with unobservable workers effort by employers and efficiency wage contracts, as well as through the inclusion of a detailed government sector. This imperfection in labor markets introduces a strong internal transmission mechanism that allows the model framework to capture the business cycles in Bulgarian data better than earlier models, and setups assuming perfectly-competitive labor markets in particular. [ABSTRACT FROM AUTHOR]

Copyright of Economía del Caribe is the property of Fundacion Universidad del Norte and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We analyze different committee designs in a model with the endogenous participation of experts who have private information about their own abilities. Each committee design involves a test of abilities whose accuracy influences experts' decisions to participate. We derive the following findings. First, higher wages continuously lower the quality of experts on the committee. Second, and as a consequence of this, optimal committees involve low wages. Third, an increase in transparency improves the quality of experts on the committee. Fourth, larger committees attract less able experts than smaller ones, unless the committee operates under full transparency. [ABSTRACT FROM AUTHOR]

This study explores how technology adoption affects labor. I investigate the effect of restaurants' adoption of self-service kiosks on labor outcomes, using survey data from Korea. I find that businesses' adoption of self-service kiosks had little impact on their number of full-time or part-time workers. However, restaurants with a self-service kiosk decreased both the wages of their part-time workers and the number of unpaid family members they employed. The results are driven by franchise restaurants. Independently owned restaurants that adopted kiosks increased the wages of their full-time workers. These findings provide support for the efficiency wage theory as well as the skill-biased technological change theory. The results suggest that when businesses adopt new technologies, these technologies do not replace unskilled labor, but rather raise the relative wages of skilled workers. • Adoption of self-service technology by restaurants did not affect the number of employees. • Adoption reduced the wages of part-time workers and the number of unpaid family members. • Franchise restaurants were the driving force behind these results. • New technologies raise the relative wages of skilled workers rather than replacing unskilled labor. [ABSTRACT FROM AUTHOR]

The paper uses Schumpeter's legacy tools to analyze the specific and distinctive effects of the rates and directions of technological change on the two distinct ingredients of the income distribution – wage and wealth inequality. It argues that the trend towards rising wage and wealth inequalities in high-income countries could be limited by the Schumpeterian creative destruction brought by the introduction of radical technological change with clear labor-intensive and capital-saving biases. Radical and labor-intensive, job-enriching technological change can contribute to decreasing wealth inequality and increasing both the share of labor in income and its even distribution across workers, thereby reducing wage and income inequality generally. Empirical evidence from a large sample of advanced high-income countries over the period 1995 to 2011 supports the hypothesis that rapid rates of introduction of radical and labor-intensive technological change are a valid antidote to income inequality in advanced countries. • Focus on the effects of technological change (TC) on income inequality in 22 OECD high-income countries from 1995 to 2011 • The implications of the Schumpeterian legacy on the analysis of income inequality • Fast rates of TC (Schumpeterian creative destruction) help decrease wealth inequality • Radical and labor-enriching TC decreases wealth inequality, increases the income labor share and evens the income distribution • The modes and inclusiveness of knowledge production determine if a skilled-labor-intensive TC reduces inequality [ABSTRACT FROM AUTHOR]