ch 19 terms

Question 1

define compensating differential

Answer 1

higher wage to compensate for higher risk or unpleasantness

Question 2

define human capital

Answer 2

accumulation of investment in self: education

Question 3

what is the human capital theory

Answer 3

workers with higher education are more efficient and desireabke

Question 4

what is signalling theory of education

Answer 4

firms use education to sort high-ability and low-ability workers
education doesn’t effect productivity, but difficulty of getting a degree makes you superior

Question 5

define superstar phenomenon

Answer 5

those with high ability, effort, luck rise astronomically in markets that:
lots of consumers can enjoy for cheap
want from the best producer
firms supply at low cost

Question 6

theory of efficiency wages

Answer 6

idea that above avg wages motivate worker because they have smt to lose

Question 7

which workers are affected by minimum wage laws

Answer 7

low skilled and inexperienced workers

Question 8

what naturally combats employer discrimination

Answer 8

competitive markets
they want to max profit so hire the most efficient worker