EC120 Chapter Notes - Chapter 19: Making Money, Signalling Theory, Human Capital
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EC120 Full Course Notes
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A difference in wages that arises to offset the nonmonetary characteristics of different jobs. The accumulation of investments in people such as education and on the job training. Many personal characteristics determine how productive workers are and therefore play a role in determining the wages they earn. Hard work is often granted with a greater pay check. Chance that the skills a person learns becomes obsolete. Alternative view; when people earn a degree they do not become more productive but they do signal their high ability to prospective employers. Two view of education: human capital theory and the signalling theory. Above equilibrium wages: minimum wage laws, unions and efficiency wages. Union: a worker association that bargains with employer over wages and working conditions. Strike: the organized withdrawal of labour from a firm by a union. Efficiency wages: above equilibrium wages paid by firms in order to increase worker productivity.
