Wage Differentials and Wage Discrimination A2 Economics
Aims and Objectives Aim: • Understand wage differentials in the labour market. Objectives: • All: define wage differentials • Most: analyse wage differentials in the labour market • Some: evaluate whether or not wage differentials can be justified
Starter: Discussion • Why do men on average get paid more than women? • Why do premiership footballers get paid more than brain surgeons? • Why do white people on average get paid more than black people?
Wage Differentials Definition: • Differences in wage rates arising between individuals, occupations, industries, firms, and regions. Task: In groups try and think of as many reasons, as to why wage rates differ in an economy.
Wage Differentials Between Groups Skilled and Unskilled Workers • Skilled workers receive higher wages than unskilled workers because the demand for skilled workers is higher and they are in fewer supply. • MRP of skilled workers is higher. • More difficult to substitute skilled workers
Wage Differentials Between Groups Wage Rate /MRP Neurosurgeons SN WN Cleaners SC WB DC DN QC Quantity of Labour Employed
Wage Differentials Between Groups: Gender • Differences between gender. • Men are paid more than women. • In part due to more women working part time than men. • MRP of women is less than men, therefore firms demand more men. • Greater percentage of women work in lower paid jobs. • More men attend university • Data
Wage Differentials Between Groups: Part Time and Full Time Workers • Part time and full time workers. • Part time workers tend to receive lower pay than full time. • Supply of part time workers is relatively high compared to demand. (MRP is low) • Smaller percentage of PT workers are members of trade unions.
Wage Differentials Between Groups: Ethnicity • Workers from ethnic minority groups are paid less on average than white people. • High % are employed in part time jobs such as restaurants where pay is low. • Data
Mr Average of Football Nets £1m • Is the pay of top footballers justified? • Economic argument for and against. • Why shouldn’t a nurse be paid as much? Both have inelastic demands!