Reference no: EM131687510

Countries are bound to experience a degree of unemployment and that means that there is no such thing as zero unemployment rate. There are occurrences in the economy that just make it impossible to arrive at zero unemployment rate, nor is it the goal of economies to arrive at zero. The goal is to ensure that those who are willing and able to work are able to find jobs. In Chapter 28, you will learn that frictional unemployment, structural unemployment, minimum wage laws, unions and collective bargaining, are but some of the reasons behind the non-occurrence of zero unemployment rate. One theory that stands out in explaining the absence of zero unemployment rate is the Theory of Efficiency Wage (Mankiw, 2018, pp. 594-596). In this assignment, please explain what the Theory of Efficiency Wage is all about and all the issues supporting this theory. In addition, you will explain thoroughly whether you agree or disagree with this theory and explain the reason(s) for your contention. In explaining this theory, you can take the position of the employee and also that of an employer. Remember that you don't have to agree with the author all the time; you may disagree but just make sure you have well-grounded reasons for doing so.