David Altig answers a question from PGL at Angry Bear:
What did you think of Dr. Thoma's efficiency wage defense for the minimum wage?
David has a very nice follow-up and he explains how a model with variable effort might operate. He says, though:
Be, however, forewarned -- the econgeek rating on this one is pretty high.
He presents it in a way that is easy to understand, complete with graphs to illustrate his points, so that shouldn't be a problem. Interestingly, in such a model:
[V]ariable labor effort seems to undo a good measure of the (bad) effects that might otherwise follow from imposing a wage that is "too high". Might this explain why the data do not speak so clearly on the overall employment effects of the minimum wage? Maybe.
But he remains skeptical.