Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105733
Authors: 
Skott, Peter
Year of Publication: 
2004
Series/Report no.: 
Working Paper, University of Massachusetts, Department of Economics 2004-04
Abstract: 
This paper analyses the influence of norms of fairness on wage formation. Fairness is defined by `real-wage' and `relative-wage' norms that relate wage offers to workers' own current wage and to the wages of other groups of workers, and, to avoid shirking, firms pay fair wages. The wage norms change endogenously, and the result is hysteresis with respect to both employment and the distribution of wages. An extension of the model that allows `induced overeducation' may help explain trends in wage inequality.
Subjects: 
Wage norms
fairness
hysteresis
overeducation
wage inequality
unemployment
Document Type: 
Working Paper

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