EC306 Chapter Notes - Chapter 8: Indifference Curve, Competitive Equilibrium, Diminishing Returns
Document Summary
Wage structures are the relative prices of labour that are utilized to allocate labour to its most productive and efficient use and to encourage human capital development education, training, mobility, job search into areas yielding the highest return. Wages are also the prices that compensate workers for undesirable job characteristics, and, hence, they ensure that the supply of and demand for such characteristics are in balance. Wages serve the purpose of compensating employees for undesirable working conditions or for negative or costly attributes associated with a particular job. Wages also compensate by being lower than they would otherwise be for desirable working conditions such as flexible hours, stimulating tasks, and a pleasant working environment including workplace practices that facilitate work-family balance. As illustrated subsequently, many of these characteristics are associated with particular occupations, industries, regions, or firms and hence form part of the rationale for wage structures associated with these factors.
