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Lecture

Chapter 11 - Economics.docx

5 Pages
116 Views

Department
Economics
Course Code
ECON 2000
Professor
Ardeshir Noordeh

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Description
Chapter 11 Wage Rate DifferentialsOccupational Wage Structure the differences in wage rates among the occupations that exist in the labour market Wage rate differences encourage workers to see out occupations that are most productive because in order to earn a high wage rate workers will move to those occupations that pay more Having someone to work at an occupation where they are the most productive is beneficial for the society not only the individual earns higher rates but society gets products and services more efficiently Wage rate differences also encourage individuals to develop their skills and invest in training Wage Rate Differences is divided into 4 Categories1Adjustment Lags period during which workers and employers react to changes in the wage rateWage rates tend to move toward a condition of equilibrium in the labour marketIf wage rate isequilibrium there will be pressure towage rates toward equilibriumiIf wage ratesthe quantity of workers demandedand quantity of workers supplied will iiW e Equilibrium Wage Rate is when quantity of workers demandedquantity of workers suppliedIf wage rate isequilibrium there will be pressure towage rates toward equilibriumiAs wage ratethe quantity of workers demandedand quantity supplied will Therefore the difference in wage rates between the two occupations may result from an adjustment lag as workers and employers react to changes in the wage rate It takes time for workers to change jobs they dont change instantly and it takes time for market to respond If there is collective agreement wage rates remain the same
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