The long-term employment relationship Stelios is a recent graduate who is starti
ID: 1202475 • Letter: T
Question
The long-term employment relationship Stelios is a recent graduate who is starting a job at an insurance company. The firm is known for providing long-term employment and generous retirement packages, so Stelios hopes to work for the company until he retires. Initially, the value of his marginal product is roughly $50,000 per year; therefore, if the company pays according to the typical "lifetime path," one would expect Stelios to earn a starting salary that is this amount Over the years, the company expects Stellos's productivity to increase at rate at which his pay Increases, such that by the time Stelios reaches the value of his productivity. Which of the following is true of the company's motivation for paying Stelios in this manner? The only way to guarantee hard work Is to always pay employees more than the value of their productivity. New employees are willing to work for less than the value of their marginal product, knowing that their salary will exceed productivity later in life. By paying new employees more than they are worth, the company attracts the best young talent. True or False: Employers are less likely to behave opportunistically if experienced workers have lots of firm-specific human capital.Explanation / Answer
Initally, he would get less than $50,000
over the years, productivity is expected to increase with upgrade in skill
Third blank is higher than the productivity.
Second option is correct. Initially, they get less and overtime the pay increases.
True. as this experience is valid else where.
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