Factors for wage differential within the same occupation, Managerial Economics


i.     Differences in the environment:  For example a doctor sent to North Eastern Province must be paid more than a doctor working in Nairobi to persuade him to go.

ii.    Differences in the cost of living in various areas:  Living costs generally are lower in small towns than in big cities.

iii.   Differences in the price of commodities, which labour produces:  For example, consider two hunters, one hunting elephants and the other rhinos.  Both hunters are equally skilled, but the value of their output differs because the price of elephant tusks is higher than that of rhino horns.  In this case the difference in wages paid to the two individuals will equal the differences in the total value of their output.

iv.    Biological and acquired quality differences:  Human beings are born with different abilities and in different environments, which define largely the opportunities to develop their inherent qualities.  For example, not many people are born with the biological qualities required for becoming successful tennis players or surgeons, writers or artist.  The marginal productivity of workers thus differs.  These differences are called non-equalizing or non-compensating wage differentials because they are due to differences in the marginal production of individuals.

v.     Job Security:  Two people may do the same kind of work for different employers and earn differently if the lower paid person feels safer with present employer.  For example, a doctor may prefer to work in a Government hospital rather than a Private hospital because there is more job security in the civil service.

vi.    Experience:  It is often assumed that if a person does the same job for a long time, he gets experienced and skilled at it.  Hence he is likely to earn more than a person in the same profession who joined more recently.

vii    Paid-by-results jobs:  There are some jobs which pay according to one's output, e.g. jobs of salesmen and insurance agents.  Hence two people may do the same job, and earn differently if one of them works harder.

Posted Date: 11/30/2012 2:29:01 AM | Location : United States

Related Discussions:- Factors for wage differential within the same occupation, Assignment Help, Ask Question on Factors for wage differential within the same occupation, Get Answer, Expert's Help, Factors for wage differential within the same occupation Discussions

Write discussion on Factors for wage differential within the same occupation
Your posts are moderated
Related Questions
Economics contributes a great deal with towards the performance of managerial duties and responsibilities. Just as biology donates to the medical profession and physics of engineer

Drafting of Price Policy: Demand forecasts assist the management to prepare a few appropriate pricing systems, so that level of price doesn't fall and rise to a great extent at th

Let there be two consumers A and B, each buying at most two units of a good. A values having one unit at £10 and having two units at £12 whereas B values having one unit at £8 and

Internal and External factors of business operation External factors : A firm can't exercise any control over these factors. Thepolicies, plans and programmes of the firm m

Elastic Supply Supply is said to be price elastic if changes in price bring about changes in quantity supplied in greater proportion.  Thus, when price increases, quantity sup

Question 1. Discuss the practical application of Price elasticity and Income elasticity of demand Question 2. Discuss profit maximizing model in detail Question 3. Descr

a) A change in demand means that: b) On the production-possibilities drawing, unemployment is represented by:

A firm's technology needsit to combine 5 person-hours of labor with 3 machine-hours to make 1 unit of output. The firm has 15 machines in place and the wage rate rises from $10 per