bobarne,

The conventional description of efficiency wages for effort monitoring being an explanation for premium wages being paid for similar jobs by different employers is improbable, at best.

Imagine that all of the potential employees are equally qualified for the job under consideration.
Also imagine that each potential hire comes attached with a 5 year bank CD payable to their employer, but varying in rate of return from 1% to 20%, paid on the amount of the wage premium paid. To the extent that the interviewer can determine the rate of return for a given applicant, he would be willing to pay a premium wage IF the company is profitable enough to do so. The result is that hidden in the employee's paycheck is an allocation of part of company profit in a tax advantaged investment.

Of course, no such bank CD exists, but if the interviewer can rank the applicants in order of possible future value to the company, he should be willing to bid up the wage to ensure that the company is actually able to hire the highest ranked applicant, even if the current job would be satisfactorily filled by all the applicants.

In modern complex companies, variations in productivity are largely the result of differences in the products and the organization of the company itself, and are little affected by the simple productivity of the employees themselves.

Regards, Don

A very interesting way to look at it, never thought of it like that. I was somewhat trying to explain the difference in wages as a result of the business models, but was never able to.