A Siocio-Psychological Theory of Efficiency Wage Growth

Joao Faria and Mohamed Jellal ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper provides a socio-psychological theory of efficiency wage growth. The model blends agency theory with the Forced Savings hypothesis by assuming that firms set an increasing wage profile to minimize shirking costs, and that workers’ effort is positively related to the variation of wages. In its simple formulation the model derives some interesting results, such as: i) a positive relationship between the growth rate of efficiency wages and the discount rate; ii) for the case of constant returns of motivation, the growth rate of wages is unrelated with technology and workers’ preferences. The model also allows the analysis of the optimal path of employment. The positive impact of increasing efficiency wage profile on job creation depends only on workers’ returns of motivation and technology.

Keywords: Dynamic Efficiency Wage Profile; Job Satisfaction; Jobs Creation (search for similar items in EconPapers)
JEL-codes: J23 J28 J41 (search for similar items in EconPapers)
Date: 2009-09
New Economics Papers: this item is included in nep-bec, nep-cbe and nep-lab
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https://mpra.ub.uni-muenchen.de/17184/1/MPRA_paper_17184.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/17195/1/MPRA_paper_17195.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17184

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