In the long run, if all firms pursue a similar higher-than-equilibrium wage strategy, unemployment will result. And neither is there reason for firms to lower wages, since this will slacken worker effort and increase unit labor costs. The prospect of an extended period of unemployment is posited as the safeguard against employee shirking. This approach to employee motivation, however, depends on the fostering of a long-time employer-employee relationship, which in turn creates a new set of factors for labor economists to consider.
Depending, then, on the conditions unique to each industry or firm, different levels of efficiency wages will be necessary so that workers with identical productive characteristics will not receive the same wage. With this logic in mind, orthodox labor econmists apparently have a plausible answer to the puzzling question of how above-equilibrium wage firms manage to survive in a competitive economy.
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