Question

Wages: Describe how the EFO model has been used to determine wages in Sweden. Explain why it is conceptually even needed.

Answer 1

For any country to employ and follow equal employment opporutnity and pratice non-discrimination in wages amongst employees, it is mandatory to have a government policy that can regulate the standards of organizations. According to the EFO Model, the wage increase for the employees were to be based on the improvements of productivity which got accounted under the sector of Internationally traded goods.

Hence Swedens believed that when the productivity of a traddeable goods increased, it would definitely account for the growth in National GDP. This in turn will have a positive impact on the labor market thereby creating employments and opportunities. So in order to regulate laws and policies, the EFO model is needed.