Wage Differentials Flashcards
1
Q
Define wage differentials
A
Difference in wages between workers with different skills in the same industry or between those with comparable skills in different industries
2
Q
What are the reasons for wage differentials
A
Qualifications —> jobs that have higher qualification requirements have low supply and have inelastic supply
Profitability of different industries —> higher profit industries can pay more
Inherited privilege —> youngsters from high income families have better educational opportunities
3
Q
Why does geographical immobility occur
A
Search costs —> cost of searching for a job in distant places
Familiy ties —> unwilling to cut ties
Cost of housing —> higher in some areas e.g. London
