Suppose laid-off workers and other qualified unemployed workers offer to work for less than the wages being paid existing employed workers, but employers do not hire these workers for fear that existing workers will refuse to cooperate with them.This situation best describes the
A)efficiency wage theory.
B)theory of compensating wage differentials.
C)insider-outsider theory.
D)rational expectations theory.

Question

Quizplus · Accepted Answer

The insider-outsider theory explains how existing employees (insiders) have more power and influence over employment conditions than unemployed workers (outsiders), leading employers to avoid hiring outsiders at lower wages to prevent conflicts and maintain cooperation.

Suppose Laid-Off Workers and Other Qualified Unemployed Workers Offer to Work