Abstract
We introduce the quality of job matching in the effort function in order to calculate the efficiency wage. We consider two cases. In the first one, the quality of the match is perfectly observable by the firm and we show that the equilibrium unemployment level is due to both high wages and mismatch. In the second case, we assume that job matching is a random variable and we show that there are some regions in which the (efficiency) wage raise generates an effort greater than the initial wage increase and others where the reverse prevails.
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