Duality and nonparametric approaches to efficiency wages
Duality and nonparametric approaches to efficiency wages
This thesis deals with the analysis of the empirical content of efficiency wage models. The efficiency wage hypothesis is here identified with the existence of a binding incentive compatibility constraint facing an optimising firm, which implicitly defines a positive relationship between on-the-job effort and the wage the firm pays. This hypothesis has a number of striking macroeconomic implications: inter-industry wage differentials, equilibrium unemployment and real wage rigidity. Discovering any of such empirical regularities has been regarded, in the applied literature, as an indirect test supporting the efficiency wage hypothesis, as done, for example, in the seminal paper by Krueger and Summers in Econometrica (1988). In this thesis we follow a more ambitious route, focusing on the whole set of direct theoretical implications. We apply duality and nonparametric methods and derive exhaustive sets of theoretical restrictions implied by a number of efficiency wage and noncompetitive models of firm behaviour.
Duality results are first derived for static efficiency wage models. We start by considering the case of the effective labour expressed under a multiplicative form (individual on-the-job effort times the number of workers). Then, we turn to a more general analysis, which adopts a set representation for the production technology and makes no assumption on the effective labour. We also explore different forms of wage determination, including union bargaining.
It is well recognised that in reality firms are likely to face hiring and firing costs. We take into account such possibility within the setting up of a dynamic optimisation problem for the firm. Thus, an intertemporal duality analysis is carried out for deriving an exhaustive set of theoretical implications.
University of Southampton
Bruno, Giovanni Salvatore
3975036c-47de-40d2-a38f-6e89b94a4835
1997
Bruno, Giovanni Salvatore
3975036c-47de-40d2-a38f-6e89b94a4835
Bruno, Giovanni Salvatore
(1997)
Duality and nonparametric approaches to efficiency wages.
University of Southampton, Doctoral Thesis.
Record type:
Thesis
(Doctoral)
Abstract
This thesis deals with the analysis of the empirical content of efficiency wage models. The efficiency wage hypothesis is here identified with the existence of a binding incentive compatibility constraint facing an optimising firm, which implicitly defines a positive relationship between on-the-job effort and the wage the firm pays. This hypothesis has a number of striking macroeconomic implications: inter-industry wage differentials, equilibrium unemployment and real wage rigidity. Discovering any of such empirical regularities has been regarded, in the applied literature, as an indirect test supporting the efficiency wage hypothesis, as done, for example, in the seminal paper by Krueger and Summers in Econometrica (1988). In this thesis we follow a more ambitious route, focusing on the whole set of direct theoretical implications. We apply duality and nonparametric methods and derive exhaustive sets of theoretical restrictions implied by a number of efficiency wage and noncompetitive models of firm behaviour.
Duality results are first derived for static efficiency wage models. We start by considering the case of the effective labour expressed under a multiplicative form (individual on-the-job effort times the number of workers). Then, we turn to a more general analysis, which adopts a set representation for the production technology and makes no assumption on the effective labour. We also explore different forms of wage determination, including union bargaining.
It is well recognised that in reality firms are likely to face hiring and firing costs. We take into account such possibility within the setting up of a dynamic optimisation problem for the firm. Thus, an intertemporal duality analysis is carried out for deriving an exhaustive set of theoretical implications.
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Published date: 1997
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Local EPrints ID: 463058
URI: http://eprints.soton.ac.uk/id/eprint/463058
PURE UUID: 0bc2d2d3-bf91-49dc-b481-db8bcc9f2ead
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Date deposited: 04 Jul 2022 20:43
Last modified: 23 Jul 2022 01:09
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Author:
Giovanni Salvatore Bruno
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