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Brassey's Law and the economy of high wages in Nineteenth-Century economics

Petridis, R. (1996) Brassey's Law and the economy of high wages in Nineteenth-Century economics. History of Political Economy, 28 (4). pp. 583-606.

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Recently the search by economists for a satisfactory explanation of cyclical variations in involuntary unemployment has returned to analyses of the dependence of labor productivity on the real wage. These so-called efficiency-wage hypotheses suggest that it would be rational for profit-maximizing firms to pay their workers real wages in excess of the market-clearing wage in order to minimize labor cost per efficiency unit. There are a variety of channels through which higher real wages may influence productivity, and, consequently, a plethora of efficiency-wage models have been developed. Some of these models have direct antecedents, especially in the internal labor market literature of labor economics and in earlier attempts to explain wage rigidity in macroeconomics (Akerlof and Yellen 1986; Katz 1986).

Item Type: Journal Article
Publisher: Duke University Press
Copyright: © 1996 by Duke University Press
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