Efficiency wages, insiders-outsiders and wages determination: theories and evidence

Vol. 17 No. 2 (1997)

Apr-Jun / 1997
Published April 1, 1997
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Carneiro, Francisco G. 1997. “Efficiency Wages, Insiders-Outsiders and Wages Determination: Theories and Evidence”. Brazilian Journal of Political Economy 17 (2):278-98. https://doi.org/10.1590/0101-31571997-0937.

Efficiency wages, insiders-outsiders and wages determination: theories and evidence

Francisco G. Carneiro
Departamento de Economia da Universidade de Brasília – UnB, Brasília/DF, Brasil.
Brazilian Journal of Political Economy, Vol. 17 No. 2 (1997), Apr-Jun / 1997, Pages 278-298

Abstract

The article discusses alternative explanations for the rigidity of real wages in the
presence of involuntary unemployment. It is argued that real wage rigidity can be viewed as
the result of two factors: (i) trade unions’ bargaining power, in the form of insider power;
and (ii) the deliberate action of firms which try to avoid the costs associated with labour
turnover. The article also presents recent empirical evidence on the importance of insider
factors in the process of wage determination for a number of countries.

JEL Classification: J20; J31.


Keywords: Labour demand labor supply wages