Template-type: ReDif-Paper 1.0
Author-Name: Croix,David,de la
Author-Name: Palm,Franz
Author-Name: Urbain,Jean-Pierre
Author-workplace-name: METEOR
Title: Labor market dynamics when effort depends on wage growth comparisons
Abstract: We present an efficiency wage model in which workers'' effort depends on the level and on the growth rate of their wage relative to an alternative wage. Using data for four countries (US, UK, FR, GY), the implications of the model are examined and are found to be in accordance with the information in the non-stationary data. The restrictions implied by the model dynamics are not rejected by the data. Moreover the structural parameters are found to be constant through time, indicating that, although very simple, the model is likely to be robust to the Lucas critique. One interesting result is that the workers'' effort depends less on relative wages growth and more on relative wage levels in the US than in the three European countries analyzed. 
Keywords: mathematical economics and econometrics ; 
Series: Research Memoranda
Creation-Date: 1996
Number: 016
File-URL: http://edocs.ub.unimaas.nl/loader/file.asp?id=442
File-Format: application/pdf
File-Size: 273761
Handle: RePEc:unm:umamet:1996016