Efficiency-wage theory suggests that to improve workers performance, firms should:

Question

Quizplus · Accepted Answer

Efficiency-wage theory suggests that paying higher wages than the market equilibrium level can motivate workers to work harder, as they will feel valued and committed to their job. This can result in lower turnover, lower shirking, and higher productivity, ultimately increasing profitability for the firm. Firing all existing workers, spending more money on monitoring, or giving incentives for dobbing in fellow workers are not necessarily effective ways to improve workers' performance or motivation.

Efficiency-Wage Theory Suggests That to Improve Workers Performance, Firms Should