Foundations of Economic Analysis: The Labour Market Flashcards
What are the sources of wages?
Labour Economics is one of the largest branches of Economics focusing on the functioning and dynamics of the markets for wage labour
One key idea in labour economics is to think of the set of marketable skills of workers as a form of capital (human capital) in which workers make a variety of investments
Sources of wage differences:
relevant differences between workers in productivity, due to education, training and experience, ability etc.
Discrimination
The structure of the labour market.
What is meant by differentials because of relevant differences?
Innate differences vs. acquired differences
Differences in skills to do the job. If these differences are innate then a person is naturally talented. If they are acquired then a person has been specially trained/educated.
The labour market is segmented. There are different segments for each type of skill. Examples of this are people being trained to be bakers and steel workers.
Imperfect substitutability (e.g. graduates and non-graduates)
