The theory of efficiency wages Why might some firms voluntar

The theory of efficiency wages

Why might some firms voluntarily pay workers a wage above the market equilibrium, even in the presence of surplus labor? Check all that apply.

Paying higher wages can reduce a firm\'s training costs.

Higher wages attract a more competent pool of workers.

Higher wages cause workers to shirk more of their responsibilities.

Paying higher wages increases worker turnover.

Solution

Answer : When  some firms voluntarily pay workers a wage above the market equilibrium, even in the presence of surplus labor-------------

* Higher wages attract a more competent pool of workers.

* Paying higher wages increases worker turnover.

* Paying higher wages can reduce a firm\'s training costs.

The efficiency wage is the wage above equilibrium that firms voluntarily pay to increase productivity and profits. By paying an efficiency wage, firms can keep the most productive workers and increase their profits. When a firm pays above the equilibrium wage, however, more people will apply for jobs and create unemployment. Higher wages boost employee morale and increase worker productivity. Firms that pay an efficiency wage attract skilled workers and reduce employee turnover. The influence of the efficiency wage can affect the quality of labor a firm employs.