Efficiency-wage theory (效率工资理论 xiàolǜ gōngzī lǐlùn) state that firms can set wages above the market equilibrium level to better motivate workers and increase worker productivity and efficiency. Firms profit from paying higher wages if the benefit outweighs the additional costs.
- 效率 (xiàolǜ) as in production efficiency (生产效率 shēngchǎn xiàolǜ) or work efficiency (工作效率 gōngzuò xiàolǜ).
- 工资 (gōngzī) as in minimum wage (最低工资 zuìdī gōngzī).
- 理论 (lǐlùn) as in basic theory (基本理论 jīběn lǐlùn) or theoretical basis (理论基础 lǐlùn jīchǔ).
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