Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144888
Authors: 
Schlicht, Ekkehart
Year of Publication: 
2016
Series/Report no.: 
Munich Discussion Paper 2016-4
Abstract: 
Higher wages increase labor costs but improve the productivity of the labor force through several channels. If firms take this into account and set their wages accordingly, the resulting wages may fail to adjust demand and supply but may engender phenomena like over-education, discrimination, regional wage differentials and a tendency for larger firms paying higher wages. All these phenomena are well established empirically. Efficiency wage theory provides an integrated explanation for them, rather than a sundry list of diverse reasons. At the same time, it provides an efficiency argument for progressive income taxation.
Subjects: 
efficiency wages
selection wages
turnover wages
discipline wages
shirking
size-wage effect
firm-size effect
congestion-wage effect
Reder-competition
discrimination
hiring standards
minimum wage
income taxation
JEL: 
J24
J31
J63
J71
M52
D21
H21
H3
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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