File:Efficiency wage Shapiro Stiglitz.svg

English: Efficiency wage chart based on Sharpiro and Stiglitz (1984) "[Equilibrium Unemployment as a Worker Discipline Device" in the American Economic Review. Chart also draws from the interpretation in Brian Snowdon and Howard Vane (2005) Modern Macroeconomics. The chart represents the Shapiro-Stiglitz model of efficiency wages. The model shows employment below the full employment level and the wage is found at the intersection of the demand for labor and the no-shirking condition. The wage is higher than it would be at full employment.]