ECON 1B03 Chapter Notes - Chapter 19: Human Capital, Efficiency Wage

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Usman Hannan

Document Summary

Good jobs tend to have a lower equilibrium than bad jobs (i. e. more people are willing to do them, wages will be lower) Compensating differential: a difference in wages that arise to offset the nonmonetary characteristics of different jobs (i. e. increased pay for jobs including: health problems, dirty, dangerous, night shifts, etc. ) Capital: economy"s stock of equipment and structures. Human capital: the accumulation of investments in people, such as education and on-the-job training. People with more human capital make more money. Natural abilities (or personal characteristics play an important part in determining how productive a worker will be, and therefore a role in determining the wages they earn. How hard an employee works can be rewarded through commission or yearly bonuses. Chance that the education someone obtained become outdated. Someone with a college or university degree signal their high ability to prospective employers. Person signals their willingness to work by being in school for years.