Efficiency Wages

14,000,000 Leading Edge Experts on the ideXlab platform

Scan Science and Technology

Contact Leading Edge Experts & Companies

Scan Science and Technology

Contact Leading Edge Experts & Companies

The Experts below are selected from a list of 312 Experts worldwide ranked by ideXlab platform

Eugenio Proto - One of the best experts on this subject based on the ideXlab platform.

  • anonymity Efficiency Wages and technological progress
    Journal of Development Economics, 2017
    Co-Authors: Stephen Broadberry, Sayantan Ghosal, Eugenio Proto
    Abstract:

    Although the industrial revolution is often characterized as the culmination of a process of commercialisation, the precise nature of such a link remains unclear. This paper provides an analysis of one such link: the role of commercialisation in raising Wages as impersonal labour market transactions replace personalized customary relations. In the presence of an aggregate capital externality, we show that the resulting shift in relative factor prices will, under certain conditions, lead to higher capital-intensity in the production technology and hence, a faster rate of technological progress. We provide historical evidence using European data to show that England was among the most urbanized and the highest wage countries at the onset of the industrial revolution. The model highlights the effects of changes in the availability of information, typical of a modernising country, on Efficiency Wages and technological progress.

  • anonymity Efficiency Wages and technological progress
    Social Science Research Network, 2015
    Co-Authors: Stephen Broadberry, Sayantan Ghosal, Eugenio Proto
    Abstract:

    Although the Industrial Revolution is often characterized as the culmination of a process of commercialisation, the precise nature of such a link remains unclear. This paper models and analyzes such link: the role of commercialisation in raising Efficiency Wages as impersonal and anonymous labour market transactions replace personalized customary relations. In the presence of an aggregate capital externality, we show that the resulting shift in relative factor prices leads to higher capital-intensity in the production technology, resulting in a faster rate of technological progress. We provide historical evidence using European data to show that England was among the most urbanized and the highest wage countries at the onset of the Industrial Revolution. We finally calibrate the model to quantify the impact of a higher degree of anonymity on industrial production growth in England between 1300 and 1800.

  • anonymity Efficiency Wages and technological progress
    Research Papers in Economics, 2015
    Co-Authors: Stephen Broadberry, Sayantan Ghosal, Eugenio Proto
    Abstract:

    Although the Industrial Revolution is often characterized as the culmination of a process of commercialisation, the precise nature of such a link remains unclear. This paper provides an analysis of one such link: the role of commercialisation in raising Wages as impersonal labour market transactions replace personalized customary relations. In the presence of an aggregate capital externality, we show that the resulting shift in relative factor prices will, under certain conditions, lead to higher capital-intensity in the production technology and hence, a faster rate of technological progress. We provide historical evidence using European data to show that England was among the most urbanized and the highest wage countries at the onset of the Industrial Revolution. The model highlights the role of the informal sector and migration to urban areas, via their impact on the prevailing level of anonymity within an economy, as a driver of capital accumulation and technological progress in modern developing countries. Unemployment subsidies and cash transfer schemes that may have as a potential negative side effect the increase of employment in the informal sector can lead to increased Efficiency Wages, capital accumulation and technological progress in the formal sector, while restricting migration to the urban sector can have the opposite effect.

Peter G Moll - One of the best experts on this subject based on the ideXlab platform.

  • industry wage differentials and Efficiency Wages a dissenting view with south african evidence
    Journal of Development Economics, 1993
    Co-Authors: Peter G Moll
    Abstract:

    Abstract Does industry wage dispersion constitute evidence of either Efficiency Wages or rent sharing? Comparison of the industry wage premia of whites and Africans in South Africa casts doubt upon the rent extraction and the gift exchange explanations of the industry wage structure. Unions, combined with union threats, fail to explain the data. Other explanations (unobserved ability, compensating differentials, and the shirking/monitoring and turnover models) are rejected here, as they have been before. Remaining possibilities are expense preference theory and internal equity rules. Implications for future research are pointed out.

Jeanmichel Grandmont - One of the best experts on this subject based on the ideXlab platform.

  • countercyclical endogenous uncertainty shocks Efficiency Wages and procyclical precautionary labor productivity
    Social Science Research Network, 2017
    Co-Authors: Jeanmichel Grandmont
    Abstract:

    This work introduces a new mechanism generating procyclical comovements of labor productivity, employment, through endogenous variations of workers’ effort, in a simple model with Efficiency Wages, near a locally indeterminate steady state. A current endogenous countercyclical uncertainty shock makes risk averse workers more willing to provide imperfectly monitored “precautionary effort” by increasing their expected utility gain of not shirking. If workers’ relative prudence is small and decreasing fast near the steady state, firms’ Efficiency wage contracts generate significant endogenous procyclical variations of effort, employment and labor productivity, in particular when the capital-efficient labor elasticity of substitution is smaller than and close to 1.

  • endogenous procyclicality of labor productivity employment real Wages and effort in conditionally heteroskedastic sunspots unemployment business cycles with negishi solow Efficiency Wages
    Research Papers in Economics, 2016
    Co-Authors: Jeanmichel Grandmont
    Abstract:

    This work introduces a new mechanism that is able to generate procyclical comovements of aggregate labor productivity, employment and real Wages, through endogenous variations of workers' effort, in a simple model involving structural unemployment, Efficiency Wages, financial market imperfections and expectations driven conditionally heteroskedastic sunspots business cycles, near a locally indeterminate steady state. Owing to imperfect effort monitoring, workers' effort level equates their disutility of effort to their expected utility gain of not shirking, in terms of their earned real income, and of the resulting anticipated random consumption. A positive current (consumption) sunspot shock generates a countercyclical uncertainty shock, i.e. a drecrease of the anticipated sunspot volatility, and makes risk averse workers more willing to provide "precautionary effort" by increasing their expected utility gain of not shirking. If workers' relative prudence is small and decreasing fast near the steady state, profit maximizing firms' choice of Efficiency wage contracts generates significant endogenous procyclical variations of effort and employment, in particular when the capital-efficient labor elasticity of substitution is smaller than 1.

  • negishi solow Efficiency Wages unemployment insurance and dynamic deterministic indeterminacy
    International Journal of Economic Theory, 2008
    Co-Authors: Jeanmichel Grandmont
    Abstract:

    This paper introduces Efficiency Wages designed to provide workers with incentives to make appropriate effort levels, and involuntary unemployment, along the pioneering lines of Negishi (1979), Solow (1979), Shapiro and Stiglitz (1984), in a dynamic model involving heterogeneous agents and financial constraints as in Woodford (1986) and Grandmont, Pintus and de Vilder (GPV, 1998). Effort varies continuously while there is unemployment insurance funded out of taxation of labour incomes. Increasing unemployment insurance is beneficial to employment along the deterministic stationary state, and can even in some cases lead to a Pareto welfare improvement for all agents, through general equilibrium effects, by generating higher individual real labour incomes, hence larger consumptions of employed and unemployed workers, and thus a higher production. On the other hand, the local (in)determinacy properties of the stationary state are opposite to those obtained in the competitive specification of the model (GPV, 1998) : local determinacy (indeterminacy) occurs for elasticities of capitalefficient labour substitution lower (larger) than a quite small bound. Increasing unemployment insurance is more likely to lead to local indeterminacy and thus to generate dynamic inefficiencies due to the corresponding expectations coordination failures.

Yves Zenou - One of the best experts on this subject based on the ideXlab platform.

  • are shirking and leisure substitutable an empirical test of Efficiency Wages based on urban economic theory
    Regional Science and Urban Economics, 2008
    Co-Authors: Stephen L Ross, Yves Zenou
    Abstract:

    Recent theoretical work has examined the spatial distribution of unemployment using the Efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard Efficiency wage model in order to allow for behavioral substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labor market outcomes, which is tested using the Public Use Microdata sample of the 2000 U.S. Decennial Census. The empirical results suggest that Efficiency Wages operate primarily for blue collar workers, i.e. workers who tend to be in occupations that face higher levels of supervision. For this subset of workers, longer commutes imply higher levels of unemployment and higher Wages, which are both consistent with shirking and leisure being substitutable.

  • Efficiency Wages and unemployment in cities the case of high relocation costs
    Regional Science and Urban Economics, 2006
    Co-Authors: Yves Zenou
    Abstract:

    Abstract 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. We consider two information structures. In the first case, firms perfectly observe the residential location of all workers, while, in the second one, firms do not observe where workers live. In the perfect information equilibrium, we show that the Efficiency wage is increasing with distance to jobs. We also demonstrate that workers are better off and landlords worse off under the perfect information equilibrium.

  • Efficiency Wages and unemployment in cities the case of high relocation costs
    Research Papers in Economics, 2003
    Co-Authors: Yves Zenou
    Abstract:

    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. We consider two cases. 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. We also demonstrate that both workers and firms are better off in the unconstrained equilibrium. Finally, we show that a policy that reduces the unemployment benefit decreases unemployment but, interestingly, has an ambiguous effect on utilities in both equilibria. Moreover, this policy has no impact on the land rent in the unconstrained equilibrium but increases the competition in the land market in the constrained equilibrium.

  • Efficiency Wages involuntary unemployment and urban spatial structure
    Regional Science and Urban Economics, 1995
    Co-Authors: Yves Zenou, Tony Smith
    Abstract:

    A labor market model is developed within an urban spatial context, where it is shown that Efficiency-wage policies can lead to significant levels of involuntary unemployment. Commuting cost differences between workers and nonworkers tend to increase unemployment, and competition for land tends to segregate workers and nonworkers, with nonworkers relegated to the urban fringe. These findings are extended to a two-city system, where it is shown that even with free mobility of workers, significant wage and unemployment differentials can exist between cities characterized by different levels of productivity.

  • Efficiency Wages involuntary unemployment and urban spatial structure
    Research Papers in Economics, 1994
    Co-Authors: Yves Zenou, Tony Smith
    Abstract:

    The labor market model is developed within an urban spatial context, where it is shown that effeciency-wage policies can lead to significant levels of involuntary unemployment. Commuting cost differences between workers and nonworkers tend to increase unemployment, and competition for land tends to segregate workers and non-workers, with nonworkers relegated to the urban fringe. These findings are extended to a two-city system, where it is shown that even with free mobility of workers, significant wage and unemployment differentials can exist between cities characterized by different levels of productivity.

Susan Vroman - One of the best experts on this subject based on the ideXlab platform.

Related terms

Efficiency Wages - 15 days free trial to Access Experts & Abstracts