The Macroeconomic Consequences of Reciprocity in Labor Relations ∗

@inproceedings{Danthine2007TheMC,
  title={The Macroeconomic Consequences of Reciprocity in Labor Relations ∗},
  author={J P Danthine and Andr{\'e} Kurmann},
  year={2007}
}
We develop and analyze a structural model of efficiency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides a rationale for rent sharing—a feature that is very much present in the data but absent from previous formulations of the efficiency wage hypothesis. This firm-internal perspective on efficiency wages… CONTINUE READING