A firm may benefit by paying workers more than the market clearing wage because the higher wages may lead to all of the following EXCEPT

Question

Quizplus · Accepted Answer

Paying workers more than the market clearing wage may lead to lower worker turnover, improved worker morale, and reduced shirking of work as it increases their motivation and loyalty towards the firm. However, it would not lead to reduced taxes for the firm. In fact, paying higher wages may increase the firm's tax liability as it reduces the firm's pre-tax profits.

A Firm May Benefit by Paying Workers More Than the Market