Bài giảng Labour Market Economics - Chapter 10 Wage Structures Across Markets

Chapter TenWage Structures Across Markets Created by: Erica Morrill, M.Ed Fanshawe CollegeChapter 10-1© 2002 McGraw-Hill Ryerson Ltd.Chapter FocusWhy do wages vary across markets?Are public sector workers overpaid?Why are wages lower in some provinces?Are wages higher in large firms?Which industries and occupations provide the highest wages?2© 2002 McGraw-Hill Ryerson Ltd.Wage Structure Determinants OccupationIndustryRegionLarge vs. Small firmsMen vs. WomenRace or ethnicityImmigrant statusUnion statusPublic vs. Private Sector3© 2002 McGraw-Hill Ryerson Ltd.Earnings FunctionIndividual (log) wages depend onformal schoolinglabour market work experienceunobserved ability or luckCoefficients on schooling and experience can be interpreted as rates of return4© 2002 McGraw-Hill Ryerson Ltd.1999 CensusPure regional wage differentialOccupational premiumsIndustry premiums5© 2002 McGraw-Hill Ryerson Ltd.Theoretical IssuesCompensating differentialsImmobility across sectorsShort run vs. Long runUnobserved heterogeneity6© 2002 McGraw-Hill Ryerson Ltd.Occupational Wage StructuresThe wage structure between various occupations or occupation groups23 two-digit major groups16 occupational classifications7© 2002 McGraw-Hill Ryerson Ltd.Figure 10.1 Occupational Wage DifferentialSsDsSuDuSkilled LabourUnskilled labourWsWuNsNu8© 2002 McGraw-Hill Ryerson Ltd.Interoccupational Wage DifferentialsCompensation for nonpecuniary differences human capital investment endowed skillsShort run adjustments demand factorsNon Competitive Factorsoccupational licensing, regulation on entry, unions and legislation on wages9© 2002 McGraw-Hill Ryerson Ltd.Regional Wage StructuresReasonsgeographic preferencesCompensating differencescost of living, remoteness, climate, nonprice externalities; pollution, congestionShort run factorsinduce mobility to encourage long run equilibriumNoncompetitive factorscost of moving, artificial barriers and public policies10© 2002 McGraw-Hill Ryerson Ltd.Migration DecisionGeographic mobility will occur if marginal benefit exceed marginal costsFactors influencing mobilityAgeUnemployment ratesBusiness cycleDistance Cultural differences11© 2002 McGraw-Hill Ryerson Ltd.Interindustry Wage DifferentialsAverage industry wage reflects a variety of factorsOccupational compositionPersonal characteristicsRegional dominationPure industry wage differentials are difficult to calculate12© 2002 McGraw-Hill Ryerson Ltd.Interindustry Wage DifferentialsNonpecuniary aspects:unpleasant or unsafe work conditions, seasonal or cyclical employmentShort run demand factorsreallocation, technology change,free trade and global competitionNoncompetitive factorsmonopoly rents,wage laws,unions and licensing13© 2002 McGraw-Hill Ryerson Ltd.WagesFirms may pay wages above market rate toimprove moralereduce turnoverelicit effortdiscourage unionizationestablish queue of applicants14© 2002 McGraw-Hill Ryerson Ltd.Efficiency WagesProductivity-enhancing wagesPayment of efficiency wages may differ by industryVoluntarily paid by the firmRationale for policies designed to protect “good jobs”15© 2002 McGraw-Hill Ryerson Ltd.Interfirm Wage DifferentialsNonpecuniary factorspoor working conditionsShort run demand increasesNoncompetitive conditionsmonopoly position in the product marketunion in the labour marketpay efficiency wages16© 2002 McGraw-Hill Ryerson Ltd.Public vs. Private Sector Wage DifferentialsNonpecuniaryjob security, fringe benefits and political visibilityShort run factorsreflect a short run disequilibriumNoncompetitive factorspolitical constraint, monopsony, inelastic demand and unionization17© 2002 McGraw-Hill Ryerson Ltd.End of Chapter TenChapter 10-18© 2002 McGraw-Hill Ryerson Ltd.