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Efficiency Wages-Expected losses

Expected losses to the workers from shirking are raised when a firm accepts a policy of: (1) Dividing the productive tasks and hence the division of labor is optimal. (2) Paying the efficiency wages which surpass market-clearing wages. (3) Avoiding the legal liability by not writing the letters of recommendation for past employees. (4) Minimizing the retained earnings by maximizing the dividend payments to the corporate stock-holders.

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