Which of the following is a source of wage stickiness?
I. fixed wage contracts
II. minimum wage laws
III. workers and firms want to avoid complexity of negotiating contracts frequently
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

All three options contribute to wage stickiness. Fixed wage contracts limit the ability of firms to adjust wages to changes in the labor market, while minimum wage laws establish a floor for wage negotiations. Finally, negotiating contracts frequently can be complex and time-consuming, incentivizing both workers and firms to avoid more frequent wage negotiations.

Which of the Following Is a Source of Wage Stickiness