How can paying workers an above-market wage result in greater efficiency? What are the implications for the flexibility of wages?
What will be an ideal response?
An above-market wage raises the opportunity cost of losing a job. Workers thus have more incentive to work hard and put more effort into their jobs. Higher wages also reduce shirking on the job, so the firm does not have to hire as many supervisory personnel to make sure workers are doing their jobs. The higher wage also reduces turnover which can be costly to firms. The implication for the flexibility of wages is that they would tend to be more inflexible if efficiency wages are paid. Employers would be reluctant to cut wages because it can lower morale, increase shirking, and increase turnover.
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A country is using a beggar-thy-neighbor policy whenever:
A) it uses contractionary monetary policy to attract capital inflows from other countries. B) it devalues its currency to improve its macroeconomic position at the expense of its trading partners. C) it revalues its currency to improve its macroeconomic position and that of its trading partners. D) it cooperates with other countries in establishing its monetary policy.
If total utility increases from 10 to 15 for the second unit of a good consumed, the marginal utility of the second unit is 25
a. True b. False Indicate whether the statement is true or false