A Review of Recent Development of Efficiency Wage Theory

This paper systematically expatiates on the recent developments of efficiency wage thoery and highlights three kinds of efficiency wage models:Solow's Model,Shirking Model and Turnover Model,which have been ardently discussed in the Western academia.It points out that these models can give out a clear explanation for the ongoing wage determining mechanism in western countries,but from the macroeconomic view the efficiency wage may not be the best wage system.However,it is highly necessary to fully understand and master these models in order to establish an effective wage determining mechanism appropriate to the open market system in China.