Economists have several explanations for the intuition behind efficiency wages.

These results, by themselves inconsistent with the oligopoly-oligopsony hypothesis, may be due to the prevalence of other factors, such as efficiency wages.

Sociological theories: Efficiency wages may result from traditions.

Unlike implicit contrary theory and efficiency wages, this line of research does not rely on a higher than market-clearing wage level.

There may be full employment in the economy, and yet efficiency wages may prevail in some occupations.

However, efficiency wages do not necessarily imply unemployment, but only uncleared markets and job rationing in those markets.

Efficiency wages offer therefore a market failure explanation of unemployment - in contrast to theories which emphasize government intervention (such as minimum wages).

There are several theories (or "microfoundations") of why managers pay efficiency wages (wages above the market clearing rate):

Behavioral economists highlight individual biases in decision making, and often involve problems and solutions concerning sticky wages and efficiency wages.

Economists have several theories explaining the possibility of involuntary unemployment including implicit contract theory, disequilibrium theory, staggered wage setting, and efficiency wages.

Nutritional theories: In developing countries, efficiency wages may allow workers to eat well enough to avoid illness and to be able to work harder and even more productively.

He is notable for his foundational views on altruism, cooperation, epistemic game theory, gene-culture coevolution, efficiency wages, strong reciprocity, and human capital theory.

The model of efficiency wages, largely based on shirking, developed by Carl Shapiro and Joseph E. Stiglitz has been particularly influential.

For example Akerlof and Katz 1989: if older workers receive efficiency wages, younger workers may be prepared to work for less in order to receive those later.

This type of involuntary unemployment is consistent with Keynes's definition while efficiency wages and implicit contract theory do not fit well with Keynes's focus on demand deficiency.

The work of George Akerlof and Janet Yellen on efficiency wages based on notions of fairness provides an example of a feminist model of economic actors.

In employment, employers (principal) may use piece rates/commissions, profit sharing, efficiency wages, performance measurement (including financial statements), the agent posting a bond, or the threat of termination of employment.

On efficiency wages, Schlicht has argued that the offering by employers of above-market wages may have to do with turnover costs, which the employer attempts to reduce by paying a "job rent".

Marshallian efficiency wages would make employers pay different wages to workers who are of different efficiency, such that the employer would be indifferent between more efficient workers and less efficient workers.

In the theory of efficiency wages, firms make sure that their workers have enough money to buy food and housing because adequately fed and housed workers are more productive than workers teetering on destitution.

Among his work in labor economics are papers on the theory of wealth distribution, efficiency wages and wage discrimination, in which Schlicht offers rationales for why such commonly observed phenomena may emerge in a free market.

This is an alternative to other common approaches to efficiency wages such as the "discipline" theory by e.g. Shapiro and Stiglitz, or the "adverse selection" and "loyalty" models by e.g. Akerlof.

(with R. Ramaswamy) Efficiency Wages and Wage Dispersion, Cambridge Working Papers in Economics, Department of Applied Economics, University of Cambridge, 17 pages.

For example, in the theory of "efficiency wages," a labor market can be in equilibrium above the market-clearing wage, since each employer has the incentive to pay wages above market-clearing to motivate their employees on the job.

What economists call "efficiency wages" (a company paying higher salaries than the minimum it needs to pay, so that it gets a skilled, cooperative, loyal work force) are disappearing to be replaced by a different form of motivation - the fear of losing one's job.

Economists have several explanations for the intuition behind efficiency wages.

Their conclusion is that the Ford experience supports efficiency wage interpretations.

Efficiency wage theories explain why firms might pay their employees more than the market clearing rate.

These enhancements, known as efficiency wage effects, cut the cost of rent sharing.

In efficiency wage models, workers are paid at levels that maximize productivity instead of clearing the market.

The adverse selection model adds yet another flavour to our broad set of efficiency wage models.

The authors include other variables based on two other theories: efficiency wage and search theory.

Efficiency wage theories tie back with the rationale of the firm as a form of productive organization.

These results, by themselves inconsistent with the oligopoly-oligopsony hypothesis, may be due to the prevalence of other factors, such as efficiency wages.

Sociological theories: Efficiency wages may result from traditions.

Akerlof (1982) provided the first explicitly sociological model leading to the efficiency wage hypothesis.

Mr. Stiglitz did not invent efficiency wage theory, but he certainly elaborated on it.

Unlike implicit contrary theory and efficiency wages, this line of research does not rely on a higher than market-clearing wage level.

Efficiency wage models suggest that employers pay their workers above market clearing wages in order to enhance their productivity.

There may be full employment in the economy, and yet efficiency wages may prevail in some occupations.

However, efficiency wages do not necessarily imply unemployment, but only uncleared markets and job rationing in those markets.

Efficiency Wage Models of the Labor Market.

Efficiency wages offer therefore a market failure explanation of unemployment - in contrast to theories which emphasize government intervention (such as minimum wages).

There are several theories (or "microfoundations") of why managers pay efficiency wages (wages above the market clearing rate):

The manager thus may pay an efficiency wage in order to create or increase the cost of job loss, which gives a sting to the threat of firing.

In labor economics, the efficiency wage hypothesis argues that wages, at least in some markets, form in a way that is not market-clearing.

Behavioral economists highlight individual biases in decision making, and often involve problems and solutions concerning sticky wages and efficiency wages.

Modern mainstream economics points to cases where equilibrium does not correspond to market clearing (but instead to unemployment), as with the efficiency wage hypothesis in labor economics.

Economists have several theories explaining the possibility of involuntary unemployment including implicit contract theory, disequilibrium theory, staggered wage setting, and efficiency wages.

As part of this effort, he calculated the value of voluntary labor in the United States, which is a factor considered in the analysis of efficiency wage.