2023-09-28 14:46:10 +00:00
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abstract: 'The efficiency wage is an important topic in the theory of employment.
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In a traditional efficiency wage model, only the representative firm is
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optimizing against an assumed S-shaped effort supply function. This
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S-shaped supply curve is critical for the model and the absence of a
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derivation of the curve in the literature means that it is an incomplete
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theory. In the present paper, we extend the model by specifying a
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worker''s representative utility function so that the corresponding
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argmax function will be the S-shaped effort supply curve. This will make
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the worker''s decision process endogenous and will produce a more
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complete model. The importance of this extension is clear. The
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characterization of the utility function will make explicit the
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necessary conditions and crucial assumptions of the traditional model.
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More importantly, the extension will allow researchers to introduce
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employment compensation factors into the worker''s utility function for
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analysis. This has important bearings on future development in
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employment theory. For example, a worker''s satisfaction from shirking
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(net of dismissal risks), or his or her willingness to search for jobs
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(net of search cost), can now be included in his or her utility function
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to form an optimal work or search strategy. Incorporating the worker''s
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optimization behaviour into the model will also enable researchers to
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study policy directed not just towards firms but also towards the
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worker''s decision process. Furthermore, this approach provides a
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framework for researchers to generate comparative statics. These
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comparative statics can lead to interesting topics for econometric
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models or to further research within this field.'
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affiliation: 'Wu, JSK (Corresponding Author), Univ Hong Kong, Sch Econ \& Finance,
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KK Leung Bldg,Pokfulam Rd, Hong Kong, Hong Kong, Peoples R China.
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Wu, Joseph S. K.; Ho, Chi Pui, Univ Hong Kong, Hong Kong, Hong Kong, Peoples R China.'
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author: Wu, Joseph S. K. and Ho, Chi Pui
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author-email: josephwu@econ.hku.hk
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author_list:
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- family: Wu
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given: Joseph S. K.
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- family: Ho
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given: Chi Pui
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da: '2023-09-28'
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doi: 10.1111/1468-0106.12003
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eissn: 1468-0106
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files: []
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issn: 1361-374X
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journal: PACIFIC ECONOMIC REVIEW
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keywords-plus: 'LABOR-MARKETS; MODEL; UNEMPLOYMENT; PRODUCTIVITY; HYPOTHESIS;
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INEQUALITY; NUTRITION; RIGIDITY; INCOME; SIZE'
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language: English
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month: DEC
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number: '5'
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number-of-cited-references: '44'
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pages: 660-676
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papis_id: c58b3f8a9f9441281ce75ef74645442b
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ref: Wu2012morecomplete
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times-cited: '4'
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title: TOWARDS A MORE COMPLETE EFFICIENCY WAGE THEORY
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2023-10-01 08:15:07 +00:00
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type: article
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2023-09-28 14:46:10 +00:00
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unique-id: WOS:000314515300003
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usage-count-last-180-days: '0'
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usage-count-since-2013: '18'
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volume: '17'
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web-of-science-categories: Economics
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year: '2012'
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