Textbook Guide Economics: Efficiency Wage, Human Capital, Price Floor
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ECO102H1 Full Course Notes
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Document Summary
Education typically increases the workers" wages from a human-capital view because it increases productivity; alternatively, education could also signal a higher ability to employers, thus resulting in higher wages: minimum-wage (price floor) legislation can cause above-equilibrium wages. Worker associations that negotiate with employers over wages and working conditions, known as unions, can be responsible for minimum-wage legislation. The economics of discrimination: in economics, discrimination is the offering of different opportunities from the marketplace to similar individuals who may differ by race, ethnic group, sex, or other personal and social characteristics. Discrimination is typically a result of political decisions, not economic decisions; the former usually results in economic deprivation. Wage differences persist in competitive markets when customers are willing to pay to maintain their bigotry/discriminatory practice at specific firms or when the government mandates it. Review questions: define a compensating differential and give an example illustrating this definition.
