Week 11: Work and the labor market Flashcards
Major decisions of a firm:
- How to price their products
- How to manage costs
- Wages / compensation
Wage determination
what is salary wage based on? What should it be based on?
what is salary wage based on? What should it be based on?
It’s based on:
- Productivity
- Human capital
- Compensating differences
- Discrimination
*Black and Hispanic women experience the largest gender wage gap
Regression analysis
a statistical technique to account for several variables at once, it helps us study gender and racial wage gaps
Occupational segregation
people of different races and genders are unevenly represented (overrepresented or underrepresented) in different kids of jobs, which have different wages, benefits and working conditions.
Minimum wage increase:
- Occupational segregation mostly explains part of the gender and racial wage gaps
- The idea that women and people of color are mployed disproportionately in lower paid jobs
- One solution to reduce the gender and racial gaps is to raise the minimum wage
Potential costs of minimum wage increases:
- Cut in hours and / or layoffs
- Increases in price / inflation
How come higher wage costs do not lead to layoff/reduced employment?
- Slightly higher prices
- Lower costs for business
- Increases in productivity
- Increases in local economic growth / spending
Who earns minimum wage?
What people think:
- Teenagers
- Works part time after school
- Lives with parents
- Earning extra spending money
The reality:
- Average age: 35 years old
- 88% are not teens (They’re 20 or older)
- 36% are 40 or older
- 56% are women
- 28% have children
- 55% work full time
- On average they earn half of their family’s total income
Compensating differentials
the higher pay that a company must pay under perfect competition to compensate for bad working conditions
