wage differentials Flashcards
(14 cards)
what are 5 things that tell us the labour market is imperfect
labour isnt homogenous
non- monetary considerations
labour noy perf mobile
trade unions and supply restrictions
monopsonies and wage setting abilities
what is a segmented labour market
there are many separate labour markets (sub-markets) rather than just one e.g. the market for doctors, bakers or teachers. In practice there may be many barriers to entering a particular occupation.
why can wage differentials exist in non competing groups
Wage differentials exist in non-competing groups because people in different groups cannot easily move between jobs.
workers who, for various reasons like skills, do not directly compete with each other for the same jobs- and this separation helps explain differences in wages between them.
The idea is that not all workers are substitutes
whats the conseuquence of innate human differences
Some people are more academically intelligent, some have exceptional practical (manual) skills, and some are athletic e.g brain surgeon, Premier League footballer
It is not enough just to have a rare skill the skill must be rare in supply in relation to the demand for it.
how does this link to non competing groups
Such non-competing groups are assumed to supply their labour in segmented labour markets which are separated by overwhelming barriers caused by innate human differences.
what are some barriers preventing workers from moving into different professions
discrimination
unpleasant working conditions
dangerous job
geographical mobility
skills and experience
qualifications
imperfect information
examples (general for understanding of wage differentials)
Occupations e.g sales assistants and architects
Industries e.g medicine and hairdressing
Firms e.g Lidl and Asda
Regions e.g NE of England and SE of England
what are demand factors affecting WD
The level of MRP e.g fooballers way higher MRP as they bring tv media to club, merch selling etc
The wage elasticity of demand for labour e.g footballers very unique skills/ not replaceable with elasticity of around -0.3 to -0.1
what are supply factors affecting WD
The availability (supply) of labour
The wage elasticity of supply of labour (PL players very inelastic so very low due to extremely high barriers to entry)
The level of human capital required
changes in what can change the size of wage differentials over time
MRP (Demand changes for the product)
Changes in the supply of workers e.g due to improved training programmes, immigration.
Power of TUs e.g union density
Monopsony market power changes
The government finances for the public sector
Minimum and Living Wages changes
whats a PL example of this
Premier League footballers have significantly risen relative to Second Division players in recent times due to the large rises in revenue the top league clubs can earn from TV contracts and merchandise sales.
what 3 things may cause problematic wage differentials
Gender
Ethnic Groups
Disability
Some of these are caused by discrimination.
whats an example for gender in the BBC
Senior women journalists claimed that since February 2020, there was a gap of about £36,000 a year in pensionable salary compared to equivalent male presenters.
This raises inequalities.
In terms of a themes link, what is the tickle down effect
higher wages, more spending, multiplier effect, increase tax revenue
