Efficiency-wage theories

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Efficiency-wage theories are theories of real-wage rigidity and unemployment according to which firms raise labor productivity and profits by keeping real wages above the equilibrium level.

Definition

According to Macroeconomics by Mankiw (7th edition),

Efficiency-wage theories. Theories of real-wage rigidity and unemployment according to which firms raise labor productivity and profits by keeping real wages above the equilibrium level.
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