high supply of jobs
low supply of jobs
lower wages
higher wages
human capital
accumulation of investments in people like education & on-d-job-training
compensating differential
a difference in wages that arises from nonmonetary characteristics of different jobs
firms
workers
demanders of labor
-willing to pay more for highly educated workers
Suppliers of labor
- willing to pay the cost of becoming educated
theory of signaling in education
when people earn a college degree, for instance, they do not become more productive, but they do signal a higher ability to prospective employers.
discrimination
the offering of different opportunities to similar individuals who differ only
by race, sex, age, or other personal characteristic
natural ability
effort
chance
workers who are naturally born with a ability to do smt usually earn more.
ppl who work hard are more productive & earn more
placed in the right path. (luck or chance)
Gini ratio
area A/ Area A + Area B
Area A is the area between the Line of Perfect Equality and the Lorenz Curve.
Area B is the area under the Lorenz Curve.
3 causes of income inequality
ability
education & training
discrimination
poverty rate
the percentage of the population whose family income falls below an absolute level called the poverty line.
poverty line
an absolute level of income set by the federal government for each family size below which a family is deemed to be in
poverty.
poverty is correlated with
race
age
family composition
