Abstrakt
This paper tackles two shortcomings of present efficiency wage models. Firstly, they do not fully account for labour heterogeneity, thus implying that high-effort and low-effort units of labour are interchangeable.
Secondly, building on homogeneity of labour, the models derive involuntary unemployment from effort decisions of workers which are voluntary. We offer a reformulation of the theory: Each of the effort or quality levels is regarded as a separate market with its own clearing quantity and price.
As such unemployment is a result of workers' reluctance to adjust to the prevailing market conditions on the respective labour sub-market. We propose to employ the demand for workers' characteristics instead of the demand for workers.
This approach shows that in equilibrium employers will not choose among all workers but only select specific characteristic-types. Therefore to become attractive, an unemployed worker has to significantly alter either his wage or the bundle of offered characteristics.