A key feature of monopsony is that a single firm pays its workers a wage ( w) less than the marginal revenue product (MRP ). Ever since its creation by Joan Robinson (1933), this feature has been explained as a symbol of the monopsonistic firm exploiting its workers. By using a simple standard...

The employment relationship is to a large extent characterized by incomplete contracts, in which workers have a considerable degree of discretion over the choice of their work effort. This discretion at work kicks in the potential importance of “gift exchange” or reciprocity between workers...

This paper models the firm as a community à la Akerlof (1980) to account for asymmetric behavior, and in particular, downward rigidity of wages. It is shown that, through social interaction among workers in the firm community, wage cuts can give rise to a large, discontinuous fall in labor...

Palley (1995) recently built a job-hour model to provide us with a new view regarding the reason for unemployment and the positive employment effect of a minimum wage hike. This paper points out some difficulties with his explanation of his paper's findings and tries to provide an alternative...

This paper models the firm as a community à la Akerlof [Akerlof, G.A., 1980. A theory of social custom, of which unemployment may be one consequence. Quarterly Journal of Economics 94, 749-775] to account for asymmetric behavior and, in particular, downward rigidity of wages. It is shown that,...