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Macroeconomics 5: Car Parts, Celery & The Labor Market
Planet Money Summer School
Efficiency Wages and Unemployment
Businesses will often start offering higher and higher wages to hang on to their precious workers. This is a situation where it's smart and actually profitable for a business to pay its workers more than it has to. The other thing it does, though, is create unemployment. There are some industries where, if the wage level gets too high, those jobs will go across the border to places with much lower labor costs.
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