Most wage differences can be understood while maintaining the assumption of equilibrium in the labor market. We deviate from that assumption, however, when we consider
A)the superstar phenomenon.
B)the theory of efficiency wages.
C)compensating differentials.
D)differences in educational attainment.

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that employers pay above-equilibrium wages to increase worker productivity, which deviates from the assumption of equilibrium in the labor market.

Most Wage Differences Can Be Understood While Maintaining the Assumption