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- Title
The Macroeconomic Consequences of Reciprocity in Labor Relations.
- Authors
Danthine, Jean-Pierre; Kurmann, Andr
- Abstract
We develop and analyze a structural model of efficiency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides a rationale for rent sharing—a feature that is very much present in the data but absent from previous formulations of the efficiency wage hypothesis. This firm-internal perspective on efficiency wages has potentially important macroeconomic consequences: rent-sharing considerations promote wage rigidity, internal amplification and differential responses to technology and demand shocks.
- Subjects
WAGES; COMMERCIAL policy; ECONOMIC policy; RECIPROCITY (Commerce); INCOME; MACROECONOMICS; INDUSTRIAL relations; STRUCTURAL frame models
- Publication
Scandinavian Journal of Economics, 2007, Vol 109, Issue 4, p857
- ISSN
0347-0520
- Publication type
Article
- DOI
10.1111/j.1467-9442.2007.00518.x