Efficiency wage theory

The division between labor markets and labor relations, as methodologies and objects of study, is artificial. In its modem form it is the result of the rigid application of static optimization methodolo to one field and a more inductive, narrative-and-case-study approach to the other. In the study that occupies this book the dichotomy appears in the guise of two different approaches to the explanation of occupational risk, one that sees it as the negotiated outcome of conflict and cooperation within the firm, the other that regards it as simply one more commodity to be transacted in the marketplace. Modem efficiency wage theory, however, represents a first step toward the dissolution of this divide, and more flexible and creative uses of game theory can be expected to take us even further down this road. 

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