Wage Differentials Flashcards

1
Q

Where is the equilibrium wage rate and level of employment?

A

when supply of labour = demand for labour

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2
Q

When are wages high?

A
  • demand for labour is high
  • demand for labour is inelastic
  • supply of labour is low
  • supply of labour is inelastic
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3
Q

When are wages low?

A
  • demand for labour is low
  • demand for labour is elastic
  • supply of labour is high
  • supply of labour is elastic
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4
Q

Why do men earn more wages than women?

A

1. child-bearing
- if on maternity leave or leave job to look after children, their skills may depreciate as not in work for very long time
- employers may think work is not their main goal
- men in education for longer than women so MRPL higher

2. part-time
- have child responsibilities so work part time to also look after children
- hourly wage for part time is less

3. less prepared to commute
- prefer to be closer to home

4. male/female subjects
- men tend to study maths, physics, biology etc which means they can get higher paying jobs
- women tend to study english, sociology etc which are more caring

5. female labour force is highly concentrated in certain areas
- demand for female labour is more spread out

6. trade union density
- there are industries where trade union power is very strong which tends to be in industries dominated by men
- can demand higher wages

7. women often the 2nd wage earner in a household
- women view promotions as equally attainable but less desirable
- social stigma for men to be earning more than their wives

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5
Q

Why do skilled workers earn more than unskilled workers?

A
  • higher MRPL for skilled workers as more productive
  • skilled workers more inelastic in supply so earn higher wages
  • demand for skilled labour is high
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6
Q

Why do older workers earn more than younger workers?

A
  • older workers more experienced as pick up more skills overtime
  • more chances for promotions
  • may be due to pay scales so the more they work the higher up they move
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7
Q

Why do full time workers earn more than part time workers?

A
  • higher supply of part time workers than full time workers
  • firms reluctant to hire part time workers as they are not secured in their job
  • more people willing to supply their labour for part time jobs so wages are lower
  • the level of skills and qualifications needed for part time workers is lower so earn less
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8
Q

Why do ethnic minorities earn lower wages?

A
  • may experience discrimination
  • on average the education level is very low for ethnic minorities and so their MRPL is very low
  • when they come to developed countries they tend to work low skilled jobs in the manufactoring and primary sector so earn lower wages
  • tend to supply their labour to very narrow jobs
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9
Q
A
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