The idea that firms will get the most for their money when they pay wages higher than the equilibrium wage is called optimal-wage theory.
What is optimal-wage theory?
Optimal efficiency wage is one that that do occur when marginal cost of an increase in wages can be attributed to the marginal benefit associated to productivity.
Hence, idea that firms will get the most for their money when they pay wages higher than the equilibrium wage is called optimal-wage theory.
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