The efficiency-wage theory best explains high teenage unemployment.

Question

Quizplus · Accepted Answer

The efficiency-wage theory suggests that firms pay their workers higher wages than equilibrium levels in order to increase productivity and reduce turnover. However, this theory does not specifically explain the phenomenon of high teenage unemployment. Other factors such as lack of skills, education, and experience are more relevant in understanding why teenagers have higher unemployment rates compared to other age groups.

The Efficiency-Wage Theory Best Explains High Teenage Unemployment