Firms may voluntarily pay wages above the level that balances the supply and demand for workers because the higher wage improves the average quality of workers that apply for employment.

Question

Quizplus · Accepted Answer

By offering higher wages, firms may attract a higher quality of applicants who may have more skills and experience, resulting in a more productive workforce. Additionally, offering higher wages may serve as a way to retain current employees and reduce turnover costs.

Firms May Voluntarily Pay Wages Above the Level That Balances