This paper surveys recent developments in the literature on efficiency wage theories of unemployment. Efficiency wage … employees. Simple versions of efficiency wage models can explain normal involuntary unemployment,segmented labor markets, and … job rationing and involuntary unemployment. A wide variety of evidence on inter-industry wage differences is analyzed …

This paper considers two sets of theories attempting to explain wage rigidities and unemployment: implicit contract … convincing explanation of the kind of wage rigidity which is associated with cyclical unemployment,while the latter theories do … features of observed patterns of unemployment. In contrast, the efficiency wage models not only provide an explanation of the …

equilibrium.There are, in general, a multiplicity of equilbria. Equilibrium may be characterized by unemployment; in spite of the … frictional unemployment.Though the constrained optimality (taking explicitly into account the costs associated with obtaining … information and search) may entail unemployment and wage dispersion, the levels of unemployment and wage dispersion in the market …

Fluctuations in the equilibrium rate of unemployment can only be understood within a theory of the natural or … equilibrium rate. It is not enough to say that unemployment is the difference between supply and demand in the labor market … themselves better off. At the equilibrium unemployment rate, employers cannot obtain labor at lower cost by offering work at …