Working Paper: CEPR ID: DP133
Authors: Assar Lindbeck; Dennis Snower
Abstract: 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.
Keywords: unemployment; efficiency wages; insiders and outsiders
JEL Codes: 023; 026; 131; 821
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wages (J31) | involuntary unemployment (J64) |
| wages (J31) | productivity (O49) |
| productivity (O49) | labor demand (J23) |
| turnover costs (J63) | wage levels (J31) |
| wage levels (J31) | prevention of outsiders being hired (J63) |