Economists say they have been paid an “efficiency wage”: Employees become more productive when their wages are higher. The higher wage may also have attracted more skilled or industrious people to the job, but this seems to account for at most a small portion of the improvements in patient health.

How does higher pay contribute to greater productivity?

Higher wages are associated with better health—less illness and more stamina, which enhance worker productivity. Greater job satisfaction can result in less conflict between employers and labor groups.

How does wages affect employee productivity?

(2013) who reported of significant positive influence of wage on productivity and performance. High wages help attract and retain highly skilled labour into organisation, since employees need to meet their individual needs. The workers are motivated to increase output and performance.