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Article
Are wages too low? Empirical implications of efficiency wage models.
Faculty Publications
  • Thomas J. Carter, University of South Florida St. Petersburg
SelectedWorks Author Profiles:

Thomas J. Carter

Document Type
Article
Publication Date
1999
Disciplines
Abstract
Firms may pay efficiency wages to enhance productivity. The conventional presumption is that efficiency wages are inefficiently high because they lead to unemployment that is also inefficiently high; government policies that lower wages raise output. Using a simple and general efficiency wage model, this paper finds a necessary and sufficient condition for the opposite conclusion. If the condition holds, wages are inefficiently low, leading to productivity that is also inefficiently low. It is the high-wage policies that raise output, even if they also lower employment. Published empirical results support the condition. No evidence is found for the conventional presumption.
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Citation only. Full-text article is available through licensed access provided by the publisher. Members of the USF System may access the full-text of the article through the authenticated link provided.

Publisher
Wiley-Blackwell
Creative Commons License
Creative Commons Attribution-Noncommercial-No Derivative Works 4.0
Citation Information
Carter, T. J. (1999). Are wages too low? Empirical implications of efficiency wage models. Southern Economic Journal, 65(3), 594-602. doi:10.2307/1060818