4) A relative weak procyclicality of job stayers' wages can be rationalized by efficiency wage
models, implicit contracts, or insider-outsider models.
Response of Workers: A higher minimum wage may motivate workers to work harder independently of any actions by firms to increase productivity.
We do this within a theoretical framework that visualizes a government determined to maximize its chances of retaining its hold on power, and using the social efficiency wage
as an instrument to enable it to do this.
In this article, I integrate two strands of theoretical literature--models of occupational choice and models of efficiency wage
to explain the above-mentioned empirical findings.
Since the 1980s, the efficiency wage
theories have occupied a prominent place in labor market research.
e the significant role of transport sector in various fields of development, this paper concentrates on testing Returns-to-Scale, Elasticity of Substitution and Efficiency Wage
Hypothesis (according to which co-efficient of wage rate is more than that of capital intensity) in transport equipment industry which is the basis for the growth of transport sector in India.
For instance, it is possible that firms pay higher wages than those set in the competitive labour market due to efficiency wage
arguments (see Shapiro and Stiglitz, 1984, Krueger and Summers, 1988).
We assume that the differential between the wages paid in the formal and the informal sectors is an efficiency wage
that firms in the formal sector pay in order to boost worker performance or to maintain employees once training costs have been assumed by the firm.
In turn, compensation after first time combined with or replaced by different modes of controlled efficiency wage
Empirical studies testing efficiency wage
hypothesis are sparse mostly due to the fact that data on labor productivity and turnover costs (labor demand) are not readily available, as most data sources are household surveys (labor supply focus).
The resulting optimum salary is called efficiency wage
, and it does not depend on the labour market fluctuations, but on the objectives set by employers regarding labour efficiency.
Neither 'shirking', nor opportunism, nor principal-agent theory, nor efficiency wage
models of the labour market escape Spencer's critical attention.