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  • 16-01-2020
  • Advanced Placement (AP)
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What is the ratchet effect?

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cmummert99
cmummert99 cmummert99
  • 18-01-2020
The ratchet effect refers to a situation where workers subject to performance pay choose to restrict their output, because they rationally anticipate that firms will respond to higher output levels by raising output requirements or cutting pay.
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