Search results
Results from the WOW.Com Content Network
In labour economics, Shapiro–Stiglitz theory of efficiency wages (or Shapiro–Stiglitz efficiency wage model) [1] is an economic theory of wages and unemployment in labour market equilibrium. It provides a technical description of why wages are unlikely to fall and how involuntary unemployment appears.
Basic tools of econophysics are probabilistic and statistical methods often taken from statistical physics.. Physics models that have been applied in economics include the kinetic theory of gas (called the kinetic exchange models of markets [7]), percolation models, chaotic models developed to study cardiac arrest, and models with self-organizing criticality as well as other models developed ...
In most simple microeconomic stories of supply and demand a static equilibrium is observed in a market; however, economic equilibrium can be also dynamic. Equilibrium may also be economy-wide or general, as opposed to the partial equilibrium of a single market. Equilibrium can change if there is a change in demand or supply conditions.
Keynes summarizes the view of classical economists that the economy should be self-adjusting if wages are fluid, and that they blame rigidity in wages for problems like unemployment. He disagrees with what he says is the orthodox view, based on the quantity theory of money , is that wage reductions have a small effect on aggregate demand, but ...
Because workers are paid more than the equilibrium wage, there may be unemployment, as the above-market wage rates attract more workers. [ citation needed ] Efficiency wages offer, therefore, a market failure explanation of unemployment in contrast to theories that emphasize government intervention such as minimum wages . [ 2 ]
Consequently, the object is in a state of static mechanical equilibrium. In classical mechanics, a particle is in mechanical equilibrium if the net force on that particle is zero. [1]: 39 By extension, a physical system made up of many parts is in mechanical equilibrium if the net force on each of its individual parts is zero. [1]: 45–46 [2]
In equilibrium, high-skilled wages tend downward, while low-skilled wages tend upward, which defines wage compression. [ 3 ] Moene and Wallerstein (2006) argue that intentional wage compression led to a shift in favour of higher- productivity industries in Scandinavia, as it made low productivity industries less profitable and high productivity ...
The supply and demand model implies that by mandating a price floor above the equilibrium wage, minimum wage laws will cause unemployment. [43] [44] This is because a greater number of people are willing to work at the higher wage while a smaller number of jobs will be available at the higher wage. Companies can be more selective in those whom ...