Imperfect information and efficiency wages together suggest that policy changes can have a short-term impact.

Question

Quizplus · Accepted Answer

Imperfect information and efficiency wages both suggest that labor markets are not perfectly efficient in the short-term. This means that policy changes, such as minimum wage increases or government subsidies, can have a short-term impact on employment and wages. However, in the long-term, market forces may adjust and the impact of these policies may be less pronounced.

Imperfect Information and Efficiency Wages Together Suggest That Policy Changes