BUSAD 120 Chapter Notes - Chapter 1: Efficiency Wage, University Of Florida, Deflation
Document Summary
Wages set at a level above the level that balances supply and demand. Labour supply > labour de mand an excess supply of labour = unemployment. Minimum wage laws are not a predominant reason for unemployment in australia most workers earn above minimum wage; and exploited workers still have jobs even if illegally paid below minimum wages. Firms may set wages high to motivate workers to perform well. Efficiency wage is an above- equilibrium wage paid by firms in order to increase worker productivity and reduce other costs. Reasons why some firms want to pay higher wages. Worker effort: better paid workers work harder. Worker quality: higher wages attract higher quality workers. Worker health: better paid workers are healthier and more productive. Worker loyalty: better paid workers are less likely to quit so that firms reduce costs of turnover and new hiring"s. Ut is the sum of all the different types of u existing at any time.
