Economics, Econometrics and Finance
8 years ago

Higher wages driven by market power and efficiency wage effects.

Economics Letters
Efficiency wages and union–firm bargaining
Gaia Garino, Christopher Martin

Paper Summary

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The article combines two theories to show that higher wages result from a mix of efficiency wages and union-firm bargaining. Market power affects wages more with efficiency wages, but the impact of bargaining and market power on wages is separate from efficiency wages. Efficiency wages also change how demand for labor works, making it bend backward.