Question

Paying higher wages increases worker turnover. Higher wages cause workers to shirk more of their responsibilities. Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity. Paying higher wages encourages workers to be more productive.

Answer 1

Paying higher wages increases worker turnover. Higher wages cause workers to shirk more of their responsibilities. Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity. Paying higher wages encourages workers to be more productive are concepts of Efficiency wages theory

Explanation:

The idea of efficiency wage theory is that increasing wages will contribute to improved productivity of labor, as workers are more driven to work with higher wages. Therefore, if businesses raise salaries–some or all of the higher labor costs will be recouped by improved retention of workers and higher productivity of labor.

Few reasons that managers might choose to pay efficiency wages are to avoid shirking, Labor market “Gift Exchange”, Lower costs of supervision, Attract higher quality labor, reduce turnover, and attract productive employees.