Efficiency wages encourage:
A) workers to look for a better job.
B) potential workers to remain out of the labour force.
C) workers to stay in their current job.
D) workers to get more job training.

Question

Quizplus · Accepted Answer

Efficiency wages are wages that are set above the equilibrium wage rate in order to increase worker productivity and reduce turnover. By offering higher wages, firms hope to attract and retain the most productive workers, who will be more likely to stay in their current job rather than look for a better one elsewhere. Therefore, the correct answer is option C, workers to stay in their current job. Option B is incorrect because efficiency wages are intended to encourage workers to enter the labor force, not to remain out of it. Option A is incorrect because efficiency wages are designed to reduce turnover, not to motivate workers to search for alternative employment. Option D is incorrect because efficiency wages are not explicitly linked to job training.

Efficiency Wages Encourage