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I don't think we actually disagree here. I agree broadly with everything you said. My point was mainly I don't see a reason to support that assumption that if pay pushes out low performers, I don't see a reason why it wouldn't equally push out high performers? This goes on the assumption that lower performers optimise more for pay than higher performers?

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Low pay pushes people to leave, regardless of performance. The argument I'm making is that, in such an environment, you retain high performers through non-economic incentives (sense of belonging, appreciation, etc.) and push low performers out by not providing those. Why would anyone ever stay in an environment that also underpaid you and where you also weren't appreciated and gave you subtle hints to leave? Under-paying actually makes it easier to push out the people you don't want. Under-paying does indeed risk pushing out high-performers; my argument is that this is risk and not a guaranteed destiny, and that high-performers may be incentivized to stay by other means.

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