The efficiency-wage theory of worker health is more relevant for explaining unemployment in less developed countries than in rich countries.

Question

Quizplus · Accepted Answer

The efficiency-wage theory suggests that paying higher wages than the market equilibrium can increase worker productivity and reduce turnover, which can lead to lower costs for firms in the long run. In less developed countries, where labor markets may be less competitive and workers may have fewer employment options, the theory may be more applicable as firms have more bargaining power to set wages above the market rate. Additionally, poor health and nutrition can be more prevalent in these countries, which can affect worker productivity and increase the potential benefits of investing in worker health. In rich countries, where labor markets are more competitive, the efficiency-wage theory may have less relevance as firms have less ability to set wages above the market rate without losing workers to competitors.

The Efficiency-Wage Theory of Worker Health Is More Relevant for Explaining