The first and simplest type emphasizes the link between wages and worker health. Better paid workers eat a more nutritious diet, and workers who eat a better diet are healthier and more productive. A firm may find it more profitable to pay high wages and have healthy, productive workers than to pay lower wages and have less healthy, less productive workers. This type of efficiency-wage theory is not relevant for firms in rich countries such as the United States. In these countries, the equilibrium wages for most workers are well above the level needed for an adequate diet. Firms are not concerned that paying equilibrium wages would place their workers’ health in jeopardy. This type of efficiency-wage theory is more relevant for firms in less developed countries where
inadequate nutrition is a more common problem. Unemployment is high in the cities of many poor African countries, for example. In these countries, f~ may fear that cutting wages would, in fact, adversely influence their workers’ health and productivity. 1n other words, concern over nutrition may explain why ‘firms do not cut wages despite a surplus of labor.
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