Abstract
Efficiency wage models of the labor market have become one of the key elements of the New- and Post-Keynesian schools of thought. In this paper, we argue that the concept of efficiency wages is not traditional to Keynesian economics, and that these schools developed the theory's modern relevance only after orthodox Keynesian theory had lost credibility in the 1970s and 1980s. The theory persists as a justification for an economy riddled with inherent real market imperfections, thus legitimizing continued interventionist macro policy. Adapted from the source document.