Explain why employers pay a lower efficiency wage when unemployment is high. How would the efficiency wage change in an economy if it became easier to monitor the work that employees did? Other than to incentivise workers to put in effort, can you think of any other reasons why wages might| be higher when unemployment is low (i.e. an upward-sloping wage-setting curve)?

Principles of Economics 2e
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ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter21: Unemployment
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Problem 35CTQ: While unemployment is highly negatively correlated with the level of economic activity, in the real...
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Explain why employers pay a lower efficiency wage when unemployment is
high. How would the efficiency wage change in an economy if it became
easier to monitor the work that employees did? Other than to incentivise
workers to put in effort, can you think of any other reasons why wages might
be higher when unemployment is low (i.e. an upward-sloping wage-setting
curve)?
Transcribed Image Text:Explain why employers pay a lower efficiency wage when unemployment is high. How would the efficiency wage change in an economy if it became easier to monitor the work that employees did? Other than to incentivise workers to put in effort, can you think of any other reasons why wages might be higher when unemployment is low (i.e. an upward-sloping wage-setting curve)?
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