The employment relationship is to a large extent characterized by incomplete contracts, in which workers have a considerable degree of discretion over the choice of their work effort. This discretion at work kicks in the potential importance of “gift exchange” or reciprocity between workers...

This paper models the firm as a community à la Akerlof (1980) to account for asymmetric behavior, and in particular, downward rigidity of wages. It is shown that, through social interaction among workers in the firm community, wage cuts can give rise to a large, discontinuous fall in labor...

This paper proposes a labor-adverse selection model where labor quality within an individual firm negatively depends upon the average working hours in the market. Under this setting, labor quality is a "pure public good" by nature, and the free market equilibrium will result in inefficient...

The efficiency wage theory is generally regarded as a plausible explanation as to why wages do not fall to clear labor markets in the presence of involuntary unemployment. At the current stage of its development, not much is said concerning the role of nominal money and the fluctuations in...

This paper examines the unemployment and wage effects of the tax shift from an income tax to a consumption tax in a shirking-type efficiency wage model. It is found that the results of the ex ante individual income-neutral and aggregate revenue-neutral proposals in this paper's efficiency wage...

Palley (1995) recently built a job-hour model to provide us with a new view regarding the reason for unemployment and the positive employment effect of a minimum wage hike. This paper points out some difficulties with his explanation of his paper's findings and tries to provide an alternative...

This paper proposes an explanation of the backward-bending labor supply curve that is not based on the premise that the income effect dominates the substitution effect. Unlike the classical labor supply theory that treats working hours and work effort as being synonymous, this paper treats them...

This paper explores the policy implications of job security laws. It extends Carter and De Lancey's (1997) efficiency wage model from the assumption of two types of workers to allow for infinite types of workers. One key difference between the models is that the proportion of nonshirking workers...

This note extends the Chen and Chiang (1992) analysis to examine the possibility that trades may be denominated in the currency of the third country. Two main conclusions are found in this note. First, the quantities of trade and employment are still invariant to invoicing strategies chosen....