Where is the equilibrium wage rate and level of employment?
when supply of labour = demand for labour
When are wages high?
- demand for labour is high
- demand for labour is inelastic
- supply of labour is low
- supply of labour is inelastic
When are wages low?
- demand for labour is low
- demand for labour is elastic
- supply of labour is high
- supply of labour is elastic
Why do men earn more wages than women?
1. child-bearing
- if on maternity leave or leave job to look after children, their skills may depreciate as not in work for very long time
- employers may think work is not their main goal
- men in education for longer than women so MRPL higher
2. part-time
- have child responsibilities so work part time to also look after children
- hourly wage for part time is less
3. less prepared to commute
- prefer to be closer to home
4. male/female subjects
- men tend to study maths, physics, biology etc which means they can get higher paying jobs
- women tend to study english, sociology etc which are more caring
5. female labour force is highly concentrated in certain areas
- demand for female labour is more spread out
6. trade union density
- there are industries where trade union power is very strong which tends to be in industries dominated by men
- can demand higher wages
7. women often the 2nd wage earner in a household
- women view promotions as equally attainable but less desirable
- social stigma for men to be earning more than their wives
Why do skilled workers earn more than unskilled workers?
- higher MRPL for skilled workers as more productive
- skilled workers more inelastic in supply so earn higher wages
- demand for skilled labour is high
Why do older workers earn more than younger workers?
- older workers more experienced as pick up more skills overtime
- more chances for promotions
- may be due to pay scales so the more they work the higher up they move
Why do full time workers earn more than part time workers?
- higher supply of part time workers than full time workers
- firms reluctant to hire part time workers as they are not secured in their job
- more people willing to supply their labour for part time jobs so wages are lower
- the level of skills and qualifications needed for part time workers is lower so earn less
Why do ethnic minorities earn lower wages?
- may experience discrimination
- on average the education level is very low for ethnic minorities and so their MRPL is very low
- when they come to developed countries they tend to work low skilled jobs in the manufactoring and primary sector so earn lower wages
- tend to supply their labour to very narrow jobs
