Wage differentials

Wage differentials

1. The wage rate- The higher the rate the less demand so labour curve slopes downwards

2. Labour productivity- Increase in labour shift the demand curve to the right and increase employment. which will increase wage rate

3. Preference to work- Increase in people's preference for work shift the supply curve and increase employment but reducts wages.net up advantages to work

4. Trade union- Trade union withdraws labour through a strike, then the supply curve of labour will shift left. Wage increase, employment falls

5. Importance of elasticity- The effect on the wage rate and level if employment. A shift in either demand or supply of labour depends upon the elasticity of the other.

6. When demand for labour is in-elastic, a reduction in supply will rise the wage rate compared to most elastic demand

7. Factors

   • Human capable difference: How much training is needed
   • Formal education:Lifetime earnings vary e.g. GCSE/A level/DEGREE earn different
   • Demand for skilled worker is greater than demand commands higher price. Less work, more accuracy

8. Discrimination

   • Age
   • Gender
   • Race
   • Disability