The no-shirking wage will be higher than the

worker’s productivity.

Paying above the worker’s reservation wage results

in employment rent.

Employers must set wages equal to workers’

reservation wages to cover the cost of work effort.

The employer has to choose the highest wage that

gives an employee an incentive to work hard.

It equals the wage you

receive in your employment.

Employers can use high employment rents to exert

power over employees.

They are the costs you have to pay for your

employment.

Higher employment rents make workers more likely to

quit their job.