In a Competitive Labor Market, Shirking on the Job Can

Essay

In a competitive labor market, shirking on the job can be a problem. In this market for labor services, the demand for labor is expressed as:
W =
where W is wage rate (dollars per hour) and L is number employed per unit of time. The no shirking constraint (NSC) is expressed as:
NSC =
where NSC is the minimum wage workers need not to shirk, and L is the number employed per unit of time. Assume that the labor force L^* = 150,000. Determine the following:
a. the level of unemployment that would result when firms pay the efficiency wage
b. the market clearing wage
c. the efficiency wage