chapter 10: Labour market outcomes Flashcards
unfinished due to topic not being in the test
define real wage
measure of the actual purchasing power of money wages (ie wages adjusted for any increase in the level of inflation)
what are the recent changes in real wages
in most years, the % increase in nominal wages is greater than the percentage increase in the general price level in short real wages have generally been rising
however there are some yrs when the growth of money wages is outstripped by the rate of growth of prices eg 2021 and 2022 (disruptions from covid and russia & ukraine)
what are the impacts of real wage on employers & real labour costs
employers can afford higher real wages if productivity is increasing. however, if the growth in real wages is higher than productivity growth real labour costs will rise and eat into employer’s profits –> employer employ less and use more capital –> unemployment
when wages below um of inflation & productivity growth, real labour costs fall and profits expand
real labour costs have been falling recently (except 2018, 2020)
what is occupational mobilitys influence on occupational wage rates (wage differentials b/w diff occupations)
where occupational mobility is high, the supply of labour is always likely to be high –> less need for employers to raise wages to attract labour
where occupational mobility is restricted, labour supply is less abundant, and wage rates tend to be higher
what are the wage differentials in the same occupation
individuals receive higher wage to reflect the various degreed of experience (ie workers with higher qualifications earn more)
what are some infleunces on wage outcomes in the same occupation (ie what can get u a higher wage than ur coworker)
geogrpahic mobility will influence wage rates in same occupation eg employers will have to pay higher wages to attract labour to isolated locations
the productivity of labour will influence wage outcomes ie under enterprise gargaining, empoyees can gain higher wages for increasing their productivity
the capacity of the firm to pay infleunce wage outcomes a some firms are more profitable and have a greater capacity to pay higher wages
