If firms pay employees an efficiency wage:
A)absenteeism would be expected to decrease.
B)turnover would be expected to increase.
C)training costs would likely increase.
D)more shirking on the job is likely to occur.

Question

If firms pay employees an efficiency wage:
A)​absenteeism would be expected to decrease.
B)​turnover would be expected to increase.
C)​training costs would likely increase.
D)​more shirking on the job is likely to occur.

Quizplus · Accepted Answer

Efficiency wages are higher than the market wage rate and are intended to increase worker productivity and reduce absenteeism. Therefore, firms paying an efficiency wage would expect absenteeism to decrease.

Choice B is incorrect because turnover is expected to decrease as the higher wages incentivize workers to remain with the firm.

Choice C is partially correct because training costs might increase due to the lower turnover rates and the need to train new workers less frequently. However, it is not necessarily a likely outcome.

Choice D is incorrect because higher wages incentivize workers to put in more effort on the job, reducing shirking.

If Firms Pay Employees an Efficiency Wage