In the most widely analyzed type of efficiency wage model of involuntary unemployment, firms pay wages in excess of … equilibrium unemployment act as a worker discipline device. This paper concerns what is usually considered the most important … involuntary unemployment. Explicit upfront bonds are only quite rarely observed. A more subtle form of the bonding critique argues …

We show the existence of involuntary unemployment based on consumers’ utility maximization and firms’ profit … seigniorage) to achieve full-employment under a situation with involuntary unemployment. Under constant prices we show the …-employment from a state with involuntary unemployment, we need budget deficit (Proposition 1). 2) If the full-employment state has …

path stability in autarky, whereas in the other there are efficiency wages, and the autarkic equilibrium may be locally … mobility, while unemployment increases in the country with labor market rigidities, reducing welfare. We also find that taste …