The missing wage rigidity in general equilibrium models of effciency wages is an artifact of the external wage reference perspective conventionally adopted by the literature. Effciency wage models based on an internal perspective, in which the wage reference is made dependent on the firm's...

We develop a reciprocity-based model of wage determination and incorporate it into a modern dynamic general equilibrium framework. We estimate the model and find that, among potential determinants of wage policy, rent-sharing (between workers and firms) and a measure of wage entitlement are...

We develop and analyze a structural model of effciency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides...