Non-Wage Labour Costs and Productivity Shifts in an Efficiency-Wage-Hours Model

Jan Beyer Schmidt-Sørensen
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Jan Beyer Schmidt-Sørensen: Aarhus School of Business

No 1991025, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: The efficiency-wage-hours model allows for efficiency effects from both wages and working hours. It is shown that it is essential for static-comparative results to distinguish between working hours per worker and the number of workers in an efficiency- wage-hours model contrary to the basic efficiency-wage model. The wage rate and working hours increase with increasing non- wage labour costs while the employment level decreases. This yields the possibility to influence these variables by means of government action. There does not only exist an efficiency wage but also an efficiency working time. Both are invariant with respect to changes in productivity.

Pages: 6
Date: 1991-06-01
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