Which of the following does NOT explain why firms and employees may prefer layoffs to wage reductions?
A) Employees may possess firm-specific training.
B) Employees may possess general training.
C) Firms may have implicitly promised a wage path to their employees.
D) Experienced workers may prefer a certain income stream to an uncertain income stream.

Question

Quizplus · Accepted Answer

Employees with general training have skills that are applicable across various firms, so their willingness to accept wage reductions over layoffs is less about the loss of firm-specific skills and more about broader employment prospects. The other options (A, C, D) relate directly to reasons why layoffs might be preferred over wage reductions due to the impact on employee morale, the implicit promises made by firms, and the preference for income certainty.

Which of the Following Does NOT Explain Why Firms and Employees