Involuntary unemployment and non-compensating wage differentials in an experimental labour market

@inproceedings{Kirchsteiger1996InvoluntaryUA,
  title={Involuntary unemployment and non-compensating wage differentials in an experimental labour market},
  author={Georg Kirchsteiger and E. Fehr and Arno Riedl},
  year={1996}
}
In this paper, the authors report the results of a series of efficiency wage experiments. Some of the key predictions of the efficiency wage hypothesis are qualitatively confirmed by the data: higher wages caused a reduction in shirking; firms offered contracts which exhibited positive job rents; firms offered systematically different wages and job rents which gave rise to noncompensating income differentials; and endogenous involuntary unemployment occurred. Copyright 1996 by Royal Economic… CONTINUE READING

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