One piece of evidence in favor of the efficiency wage model is that some sectors of the economy pay relatively high wages, whereas other sectors pay lower wages. This supports the efficiency wage model as it seems to provide evidence of what?
A) Dual labor markets exist.
B) There are compensating differentials being paid depending on the type of work being done.
C) Unemployment is constant across sectors.
D) High-wage firms take advantage of delayed-compensation contracts.
E) Workers voluntarily provide bonds in case they are caught shirking.

Question

Quizplus · Accepted Answer

The efficiency wage model suggests that higher wages can lead to increased productivity and efficiency among workers, which can result in dual labor markets where some sectors pay higher wages to incentivize and retain productive workers, while other sectors pay lower wages. This division supports the concept of dual labor markets.

One Piece of Evidence in Favor of the Efficiency Wage