Final answer:
A model where workers are not worried about being fired for lack of effort due to low wages is termed a gift-exchange model. Wages in this model are 'sticky downward' and don't easily fall even during economic downturns, as a part of an implicit contract between employer and employee that provides job security at the expense of large wage increases during good economic times.
Step-by-step explanation:
The model in which workers won't be concerned about the possibility of being fired for not working hard because the wage is so low is called a gift-exchange model. In this model, wages have a tendency to be 'sticky downward' meaning that they do not decrease easily even when the economy or a particular business is struggling. An implicit contract often exists between employers and workers, providing employees with certain stability during bad economic times at the cost of not expecting significant wage increases during good times. This behavior ensures that wages are inflexible and are likely to fall very slowly if at all, potentially leading to short-term or long-term unemployment.
One reason why wages might be 'sticky downward' is due to the implicit contract theory, which posits that employers will attempt to keep wages from falling when the economy or business is poor, and employees in return will not expect large salary hikes when conditions improve. Hence, firms are reluctant to cut wages, as doing so could lead to a loss of trust and reduced effort from employees or even drive them to leave the firm.