Adverse Selection Means That as a Firm Grows and Adds

question 12

True/False

Adverse selection means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours or may even try to avoid hard work.

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Definitions:

Employed Wage

The income received by an individual from employment, representing compensation for labor or services provided to an employer.

Salary Workers

Employees who are paid a fixed annual amount for their labor, regardless of the number of hours worked, contrasting with hourly workers.

Inclusive Unions

Labor unions that aim to represent a broad spectrum of workers, regardless of occupation, industry, or demographic characteristics.

Exclusive Unions

Labor unions that require all employees in a bargaining unit to become members of the union as a condition of employment.