The efficiency wage theory is generally regarded as a plausible explanation as to why wages do not fall to clear labor markets in the presence of involuntary unemployment. At the current stage of its development, not much is said concerning the role of nominal money and the fluctuations in...

This paper examines the unemployment and wage effects of the tax shift from an income tax to a consumption tax in a shirking-type efficiency wage model. It is found that the results of the ex ante individual income-neutral and aggregate revenue-neutral proposals in this paper's efficiency wage...