Firms tend to assess wage compensation to new hires based on

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Firms base wage compensation for new hires on what they expect a typical worker's level of productivity to be, given their observable characteristics such as education, experience, and skills. This is often referred to as the signaling theory, where job candidates signal their productivity level to potential employers through their education, work experience, and other credentials. Firms use this information to determine a competitive starting wage for the candidate that reflects their expected productivity level.

Firms Tend to Assess Wage Compensation to New Hires Based