How firms use efficiency wages to raise employee productivity and how it explains wage stickiness in the labour market
Summary :
Table of Contents
- Introduction
- Demonstrating and critically examining how a firm sets wages
- Firms in today's economic environment
- The economic theory of efficiency wages
- An explanation of wage stickiness
- Conclusion
- Bibliography
Abstract
Some firms will attempt to increase their profits by improving their worker productivity by paying a wage that is above the wage paid by other competing firms. A well known example of the gains from this sort of wage setting is found in third world economies. At the market level wage, workers may not get the necessary nutrients they require in order to carry out the working day's hard labour and to maintain a healthy lifestyle. There is a vital correlation or interaction between a workers nutritional diet and their performance or productivity at the work site.
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