[] - Final Exam Guide - Comprehensive Notes for the exam (128 pages long!)
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. 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. Compensating differential is the difference in wages that arises to offset the nonmonetary characteristics of different jobs. Human capital: the accumulation of investments in people, such as education and on-the-job training.
