Chapter 5: Incentive and Labor Productivity

Question 1

The ________studies how people are influenced by incentives and how incentives can be used
to achieve desired outcomes.

Answer 1

economics of incentives

Question 2

are rewards or punishments that are offered to encourage or
discourage certain behaviors.

Answer 2

Incentives

Question 3

can be intrinsic or extrinsic and has enormous macroeconomic implications, such as
promoting business activity and expanding participation.

Answer 3

Economic incentives

Question 4

typical examples of economic incentives

Answer 4

Salary, subsidies, tax credits and rebates, discounts, etc. are

Question 5

From the perspective of the labor market, an ______ is something that motivates workers to work harder or
more efficiently

Answer 5

incentive

Question 6

Incentive pay, also known as

Answer 6

performance-based pay or pay-for-performance,

Question 7

is a system of compensation
in which employees are rewarded for meeting or exceeding specific performance goals.

Answer 7

Incentive pay

Question 8

There are several advantages to using incentive pay as a way to motivate employees and improve
productivity.

Answer 8

, it allows organizations to align employee goals with the overall goals of the company.

increase employee engagement and job satisfaction,

a cost-effective way for organizations to attract and retain
top talent, as it allows employees to earn more based on their contributions

Question 9

potential drawbacks to using incentive pay

Answer 9

Some employees may feel that the goals
set for them are unrealistic or unfair,

create tension among employees, as some may feel that they are not being compensated fairly compared to
their colleagues

organizations need to carefully design their incentive pay systems to ensure
that they are fair, transparent, and aligned with the company’s overall goals and values.

Question 10

are additional compensation provided to employees by their employer in addition to their
regular salary or wages.

Answer 10

Fringe benefits

Question 11

Examples of fringe benefits

Answer 11

1. Health insurance
2. Retirement plans.
3. Paid time off
4. Education assistance.
5. Employee discounts.
6. Wellness programs.
7. Flexible work arrangements
8. Employee assistance programs.

Question 12

Other fringe benefits that employers may offer to their employees include:

Answer 12

Transportation benefits
▪ Child-care assistance
▪ Housing assistance
▪ Legal assistance
▪ Gym memberships
▪ On-site amenities (such as a cafeteria or fitness center)
▪ Professional development opportunities
▪ Company-provided meals or snacks
▪ Employee recognition programs
▪ Discounts on entertainment or leisure activities (such as movie tickets or theme park tickets)
▪ Corporate discounts on products or services from other companies
▪ Company-sponsored events or social activities (such as holiday parties or team-building
events

Question 13

is a system in which workers are paid a certain amount for each unit of work they complete.

Answer 13

Piece rate pay

Question 14

This can be a useful method for jobs where it is easy to measure the amount of work done, such as
assembly line work or piecework in a factory.

Answer 14

Piece rate pay

Question 15

provides workers with an incentive to work
quickly and efficiently, since they will be paid more for producing more units of work

Answer 15

Piece rate pay

Question 16

can be a good way to motivate workers and increase productivity, but it can also lead to
workers taking shortcuts or sacrificing quality in order to produce more units of work.

Answer 16

Piece rate pay

Question 17

is a system in which workers are paid a set amount for each hour of work
they complete.

Answer 17

Time rate pay,

Question 18

This is the most common method of pay in the United States, and it is used in a wide range
of industries.

Answer 18

Time Rate Pay

Question 19

is a simple and straightforward way to compensate workers, and it provides a
steady income regardless of how much work is done.

Answer 19

Time rate pay

Question 20

might be used
when it is cheaper to observe the relative ranking of a worker than the absolute level of the worker’s
productivity

Answer 20

A tournament

Question 21

are competitions in which individuals or teams compete against each other to win a prize or
reward.

Answer 21

Tournaments

Question 22

refers to how much output can be produced with a given set of inputs.

Answer 22

productivity

Question 23

increases when more output is produced with the same amount of inputs or when the same
amount of output is produced with less inputs.

Answer 23

Productivity

Question 24

is a measure of how efficiently an economy, company, or individual uses labor, capital, and other
resources to produce goods and services.

Answer 24

Productivity

Question 25

is typically measured by comparing the quantity of goods and services produced to the amount of resources used to produce them. For example, if a factory produces 100 units of a product in a given time period using 10 workers, the factory's productivity is 10 units per

Answer 25

Productivity

Question 26

According to International Labor Organization, _______________represents the total volume of output (measured in terms of Gross Domestic Product, GDP) produced per unit of labor (measured in terms of the number of employed persons or hours worked) during a given time reference period.

Answer 26

labor productivity

Question 27

OECD defined ________ as real gross domestic product (GDP) per hour worked. This captures the use of labor inputs better than just output per employee, with labor input defined as total hours worked by all persons involved.

Answer 27

labor productivity

Question 28

It is an important economic indicator that is closely linked to economic growth, competitiveness, and living standards within an economy.

Answer 28

Labor productivity

Question 29

the highest labor productivity in the world, measured in terms of GDP per hour worked.

Answer 29

Luxembourg with 128. 10

Question 30

It is often ranked highly in terms of labor productivity, due in part to its highly educated and skilled workforce, as well as its advanced infrastructure and technology.

Answer 30

Switzerland

Question 31

This country has a high level of labor productivity, particularly in certain sectors such as technology and manufacturing.

Answer 31

United States.

Question 32

It has a strong economy and is known for its high levels of labor productivity, particularly in manufacturing and engineering.

Answer 32

Germany.

Question 33

The country is known for its highly efficient and productive workforce, and has a strong tradition of continuous improvement and innovation

Answer 33

Japan.

Question 34

Labor productivity is measured by

Answer 34

dividing the total output of goods and services by the number of hours worked.

Question 35

On a macro level, labor productivity is a measure of

Answer 35

a country's economic production (real GDP) To measure the labor productivity of a country, the total output is divided by the total number of labor hours

Question 36

Formula of labor productivity in macro level

Answer 36

Labor Productivity= Real GDP/ Aggregate hours of labor

Question 37

Sources of Productivity Growth

Answer 37

Human capital. Physical Capital. Technological Progress.

Question 38

This is the knowledge, skills, and abilities that individuals possess and can use to produce goods and services.

Answer 38

Human capital.

Question 39

This refers to the stock of productive resources, such as buildings, machinery, equipment, and infrastructure, that are used to produce goods and services Investment in physical capital can take many forms, including the construction of new factories, the purchase of new machinery, and the development of transportation and communication infrastructure.

Answer 39

Physical Capital.

Question 40

is a key driver of productivity as it allows for the creation of new and better products, processes, and systems.

Answer 40

Technology

Question 41

Factors affecting Worker's productivity

Answer 41

. The availability of capital and technology. The level of education and training. The level of competition. I The level of government regulation: The level of innovation The level of worker morale. The level of worker health.

Question 42

How to Improve the Productivity of Workers

Answer 42

Providing workers with the necessary tools, resources, and training to do their jobs effectively. Offering competitive pay and benefits. Creating a positive and supportive work environment. Providing regular feedback and support. Promoting work-life balance.

Question 43

Policies that Will Help Enhance Labor Productivity

Answer 43

Providing workers with access to education and training. Investing in technology and infrastructure. Investing in technology and infrastructure. Providing incentives for productivity. Supporting work-life balance

Question 44

Problems that affect the productivity of workers.

Answer 44

Lack of motivation or engagement with the work they are doing ▪ Lack of clear goals or objectives ▪ Lack of support or resources from management or the organization ▪ Poor communication or collaboration within the team or organization ▪ Personal or external distractions, such as stress, illness, or external obligations ▪ Inadequate training or development opportunities

Question 45

is a theory is that suggests that employers pay their workers more than the minimum wage in order to increase their productivity.

Answer 45

Efficiency wage

Question 46

Why Pay Efficiency Wages?

Answer 46

1. Reduce employee turnover. Higher wages discourage workers to quit. This is especially important if hiring and training new workers is a time-consuming and costly pursuit. 2. Raise morale. Similarly, an efficient wage can keep workers happier and minimize the number of disgruntled employees who can bring down morale among others and slow down production. 3. Increase productivity. Higher wages lead to more productive workers who produce relatively more goods per hour and show greater effort. These wages also reduce so-called shirking (being lazy on the job) and cut down on absenteeism. 4. Attract and retain skilled workers. While unskilled workers may be viewed as somewhat interchangeable from the perspective of management, highly skilled workers are often in higher demand and shorter supply. 5. Trust and loyalty. Higher-paid workers tend to be more loyal to a company and are far less likely to steal or undercut the company's bottom line