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The Fair Wage-Effort Hypothesis and Unemployment

1990; Oxford University Press; Volume: 105; Issue: 2 Linguagem: Inglês

10.2307/2937787

1531-4650

George A. Akerlof, Janet L. Yellen,

Employment and Welfare Studies

This paper introduces the fair wage-effort hypothesis and explores its implications. This hypothesis is motivated by equity theory in social psychology and social exchange theory in sociology. According to the fair wage-effort hypothesis, workers proportionately withdraw effort as their actual wage falls short of their fair wage. Such behavior causes unemployment and is also consistent with observed cross-section wage differentials and unemployment patterns.