Efficiency wages

Efficiency wages

Efficiency wages – these are theories in which high wages increase worker productivity as they (i) attract higher quality job applicants; (ii) increase worker effort and reduce ‘shirking’; (iii) reduce turnover, which is costly because of the higher wages they are earning now and (iv) improve health of workers (in developing countries).

All these (B,C and D) prevent workers from being able to find jobs immediately (nothing to do with cyclical factors but some structural problem )