Compensating differential: difference in wages that arises to offset the nonmonetary
characteristics of different jobs.
Schooling raises workers’wages because makes them more productive
Degrees are a sign of ability- easier for some people to get a degree
Human capital: the accumulation of the investments in people, such as education
and on-the-job training.
Changes in technology cause changes in demand for skilled and unskilled labor
Computers need skilled workers to work them and replace the unskilled ones
Raise our need for exports with skilled labor and import by unskilled
Natural abilities influence pay (smart, athletic, sociable)
Effort (work hard), chance, beauty (reflects customers preferences)
Every customer in the market want to enjoy the good supplied by the best
The good is produced with a technology that makes it possible for the best
producer to supply every customer at low cost.
Min wage laws can bring wages above level of an unregulated market for some.