Answer to Question #313174 in Macroeconomics for captain nyagah

Question

by a suitable illustration, explain Akerlof's gift exchange motive.

Answer 1

The partial gift exchange hypothesis (Akerlof 1982, 1984) proposes that norms of fairness and reciprocity can affect wages and employment in an otherwise competitive labor market. Some firms may be willingly to pay employees in excess of the market‐clearing wage.

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