The efficiency wage hypothesis holds that:
A) there is payment of wage premiums by some employers to attract the best talent available and to enhance productivity in order to offset any increase in labor costs.
B) unless an employee can produce a value equal to the value received in wages,it will not be worthwhile to hire that worker.
C) there is increased willingness to reduce the size of the workforce,to outsource jobs overseas,and to restrict pay to control the costs of wages,salaries,and benefits.
D) there is less concern with pay position relative to that of competitors and more concern with what the company can afford.

Question

Quizplus · Accepted Answer

The efficiency wage hypothesis suggests that employers may pay higher wages than necessary to attract and retain the most productive employees. This can help to increase productivity and offset any increase in labor costs, leading to overall efficiency. Choice B is incorrect because the efficiency wage hypothesis is not based on the idea of producing equal value to wages. Choice C is incorrect because it describes actions that are not related to the efficiency wage hypothesis. Choice D is incorrect because the efficiency wage hypothesis does involve consideration of competition and the labor market.

The Efficiency Wage Hypothesis Holds That