Which is not a property of an optimal efficiency wage?
A) There is involuntary unemployment.
B) The efficiency wage is higher than the competitive wage.
C) Employed workers will not shirk on the job.
D) Any structural unemployment that results from an efficiency wage is efficient for the economy as it helps sort nonshirkers and shirkers into good and bad jobs, respectively.
E) Employment will be less with an efficiency wage than with a competitive wage.

Question

Quizplus · Accepted Answer

The concept of an optimal efficiency wage does not inherently include the notion that any resulting structural unemployment efficiently sorts nonshirkers and shirkers into good and bad jobs, respectively. This statement misrepresents the primary rationale behind efficiency wages, which is to increase worker productivity and reduce turnover by paying above the market rate, not to sort workers into different categories of jobs based on their propensity to shirk.

Which Is Not a Property of an Optimal Efficiency Wage