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Pareto Inefficiency of Market Economies: Search and Efficiency Wage Models

This paper shows that market economies with search and in which wages are affected by efficiency wage considerations are not constrained Pareto efficient. Wages are not set at Pareto efficient levels, nor is the level of employment (unemployment) Pareto efficient. We identify the nature of the biases and the welfare improving government interventions.
Year of publication:
1988-07
Authors: Greenwald, Bruce ; Stiglitz, Joseph E.
Institutions: National Bureau of Economic Research (NBER)
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application/pdf
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Type of publication: Book / Working Paper
Notes:
EFG published as The American Economic Review, Vol. 78, No. 2, pp. 351-355, (May 1988). Number 2651
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Persistent link: https://www.econbiz.de/10005714583
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