Labor Contracts as Partial Gift Exchange
Abstract
This paper explains involuntary unemployment in terms of the response of firms to workers' group behavior. Workers' effort depends upon the norms determining a fair day's work. In order to affect those norms, firms may pay more than the market-clearing wage. Industries that pay consistently more than the market-clearing wage are primary, and those that pay only the market-clearing wage are secondary. Thus, this paper also gives a theory for division of labor markets between primary and secondary.
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Akerlof suggests that hard work and above-market wages, which result in a shortage of jobs, are like an exchange of gifts between employers and employees who develop sentiment for each other.
“To explain involuntary labor-market unemployment, Akerlof (1982Akerlof ( , 1984) ) suggests that hard work and above-market wages (which result in a shortage of jobs) are like an exchange of gifts between employers and employees who”
From Gifts as Economic Signals and Social Symbols (1988) · cites this paper as Akerlof (1982
Cites
A theory of social comparison processes
Festinger, L. (1954) · Human Relations · doi:10.1177/001872675400700202 · Cited by 20,926 · see citing works
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Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1986) · The Journal of Business · doi:10.1086/296367 · Cited by 2,463 · see citing works
Pay Enough or Don't Pay at All*
Gneezy, U., & Rustichini, A. (2000) · Quarterly Journal of Economics · doi:10.1162/003355300554917 · Cited by 2,175 · see citing works
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Osterloh, M., & Rota, S. (2004) · Analyse & Kritik · doi:10.1515/auk-2004-0115 · Cited by 23 · see citing works
Mallard, G. (2019) · Cambridge University Press · doi:10.1017/9781108570497 · Cited by 49 · see citing works
- Authors
- Akerlof, G. A.
- Affiliations
- University of California, Berkeley (US)
- Corresponding author
- Akerlof, George A.
- ORCID
- Akerlof, George A.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1982-11
- Volume
- 97
- Issue
- 4
- Pages
- 543
- ISSN
- 0033-5533 (ISSN-L)
- OpenAlex
- W2099326003
- Cited by
- 3,210
- References
- 1
- Citations by year
- 2026: 57 · 2025: 74 · 2024: 101 · 2023: 125 · 2022: 96 · 2021: 82 · 2020: 106 · 2019: 126 · 2018: 113 · 2017: 111 · 2016: 125 · 2015: 118 · 2014: 143 · 2013: 128 · 2012: 127
- FWCI
- 15.43
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Quarterly Journal of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
- Social Sciences › Safety Research › Experimental Behavioral Economics Studies
- Social Sciences › Safety Research › Employment, Labor, and Gender Studies
- Keywords
- involuntary unemployment, employment contracts, gift exchange, worker effort, fairness norms, wage differentials, group behavior
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