Efficiency Wage Theory Homework Help

Enhance Your Academic Performance by Procuring Efficiency Wage Theory Assignment Help

In the subject of Economics, the topic efficiency wage theory holds immense importance. The topic can be a little tricky to comprehend on your own. You cannot expect that your teacher will give straight questions on this topic which will be easily available in your textbooks. That is the reason you must opt for efficiency wage theory homework help.

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Get an idea about the topic Efficiency Wage Theory

Efficiency wage theory actually describes the scenario where the firms may be permanently holding the real wage that is at a higher level as compared to the wages at an equilibrium level. In simple terms, you can say that efficiency wages are those wages that are above the level of market equilibrium.

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Why firms are willing to pay efficiency wages?

Firms are willing to pay efficiency wages to their workers because of various reasons like to reduce the turnover ratio, to avoid the cases of shirking, for retaining skilled workforce, for improving the productivity levels, for keeping the employees motivated, etc.

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What can be the results of this?

The effects of efficiency wages are that the market for labor may not get cleared completely. In the long run, also it is noticed that the levels of unemployment are still higher as compared to the natural rate of unemployment. The market forces will operate in such a way that instead of adjusting to the equilibrium wage level where the supply and demand are equal, there will a situation where the wage rate will be exceeding the equilibrium level, and therefore the supply will be more than the demand.

It will eventually lead to a situation where there will be more wages for the people who are actually employed, but in totality, there will be a situation of increased level of unemployment in the economy.

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