Discussion paper

DP133 Efficiency Wages Versus Insiders and Outsiders

This paper compares two theories of involuntary unemployment: the efficiency-wage theory and the insider-outsider theory. We indicate that one of the central problems in providing microfoundations for the existence of involuntary unemployment is to explain why there is no underbidding, and we compare the two theories in this contex.

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Citation

Snower, D and A Lindbeck (1986), ‘DP133 Efficiency Wages Versus Insiders and Outsiders‘, CEPR Discussion Paper No. 133. CEPR Press, Paris & London. https://cepr.org/publications/dp133