Fair Wage

A Fair Wage is a wage that is deemed fair (by either the worker or society).

• Context:
  • It can (often) be associated to a Living Wage.
  • …
• Counter-Example(s):
  • Unfair Wage.
• See: Real Wage, Excessive Wage.

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References

1990

• (Akerlof & Yellen, 1990) ⇒ George A Akerlof, and Janet L Yellen. (1990). “The Fair Wage-effort Hypothesis and Unemployment." The Quarterly Journal of Economics CV, 2. doi:10.2307/2937787
  • QUOTE: This paper explores the consequences of a hypothesis concerning worker behavior, which we shall call the fair wage–effort hypothesis. According to this hypothesis, workers have a conception of a fair wage; insofar as the actual wage is less than the fair wage, workers supply a corresponding fraction of normal effort. If [math]\displaystyle{ e }[/math] denotes effort supplied, [math]\displaystyle{ w }[/math] the actual wage, and [math]\displaystyle{ w^* }[/math] the fair wage, the fair wage–effort hypothesis says that [math]\displaystyle{ e = \textbox{min}(w/w^*,1), (1) }[/math] where effort is denoted in units such that 1 is normal effort. This hypothesis explains the existence of unemployment. Unemployment occurs when the fair wage [math]\displaystyle{ w^* }[/math] exceeds the market-clearing wage. … The motivation for the fair wage–effort hypothesis is a simple observation concerning human behavior: when people do not get what they deserve, they try to get even.

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