The principal-agent problem as it applies to labor employment refers to
A) employer and workers wanting the firm to survive and thrive.
B) firms having the profit motive, while workers may be shirking on the job.
C) employers having a problem finding qualified workers.
D) workers facing a problem finding employment.

Question

Quizplus · Accepted Answer

The principal-agent problem in labor employment occurs because employers (the principal) must entrust various tasks to their workers (the agents), but they may have different goals and incentives. Employers typically have the goal of maximizing profits, while individual workers may be more focused on their own interests or job satisfaction. This can lead to shirking or other problems that can affect the overall productivity and success of the firm.

The Principal-Agent Problem as It Applies to Labor Employment Refers