Most firms want their workers to feel good about their jobs

Most firms want their workers to feel good about their jobs. Feeling good promotes good work, which leads to higher productivity. Paying a high wage is one instrument the firm can use to achieve these goals. Economists call the theories that link the productivity or the efficiency of workers to the wage they are paid efficiency wage theories. One classical example of efficiency wage was implemented by Ford in 1914, where he increased all qualified employees pay from an average of $2.30 for a nine-hour day to $5.00 a day for an eight-hour day and this resulted in a dramatic drop in layoff rate and turnover rate of workers (Refer to the Focus in Chapter 7). Please give any two contemporary examples of efficiency wage practices and their possible effect.

Solution

One example is wage given to judges which is higher than they could get by working elsewhere.large wage motivates them to work more and study law everyday. Similarly TV actors paid on the basis of ratings of programmes I\'d efficiency wage.