00:01
So here we're talking about efficiency wages, which is the idea that you need to set wages to incentivize effort, right? and consider the following employee, right? so we have an employee and they can work hard.
00:21
If they work hard, they will get the wage equals w.
00:26
And they can also be lazy.
00:29
Or what an economist might say is shirk, right? not exert their full effort.
00:35
And here they have a choice, right? they can maybe the, they could get the wage or maybe they get fired because they're not being a very good worker, right? and if they're getting fired, they get ui.
00:49
So here, the employer needs to set this wage to incentivize people to choose to work hard, right? you need to pick w to make hard work worthwhile.
01:03
Otherwise, nobody will do it...