Why arent wages falling so to clear market in equilibrium

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Efficiency wage models are sometimes used to explain the existence of involuntary unemployment in the labour market. Provide a short description of the shirking model. Why can it be in a firm's interest to increase the wage above what is paid by other firms? Why aren't wages falling so to clear the market in equilibrium? In what way can one use ‘turn-over' in the context of efficiency wage models?

Reference no: EM13205686

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