Economics 10a Chapter 19: Chapter 19- Earnings and Discrimination
10 Feb 2014
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Some determinants of equilibrium wages compensating differential: difference in wages that arises to offset the nonmonetary characteristics of different jobs ex: dirty and dangerous jobs paid more human capital: accumulation of investments in people ex: education hypotheses for expanding wealth gap (cid:224) international trade cause domestic demand for skilled labor to rise and unskilled labor to fall, technological advances raise demand for skilled workers ability, effort, chance are factors in wage determination college degree as signal of ability or as human capital superstars (cid:224) customers want to enjoy good supplied by best producer, possible with technology three reasons that wages do not always adjust to balance labor supply and demand (cid:224) minimum wage, union, efficiency wages union: worker association that bargains with employers over wages and working conditions strike: organized withdrawal of labor from a firm by a union efficiency wages: above equilibrium wages paid by firms to increase worker productivity raising wage above equilibrium level can cause unemployment.
