Efficiency Wages 1. What determines the wage level in traditional neoclassical theory? How can low-wage workers improve their wages? a. Within the traditional theory, what do you expect to happen to a company that raises wages? What do you expect to be the effect of an increase in wages, either because of pressure from the workers and a union or from an increase in the government-mandated minimum wage? 2. If worker productivity increases when firms pay higher wages, then how can workers improve their wages? (Note: this is the efficiency wage model.) a. Do you expect that all companies will raise wages to raise productivity?