benjamin5_PPT_08

benjamin5_PPT_08 - Chapter Eight Compensating Wage...

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Chapter 8-1 Chapter Eight Compensating Wage Differentials Modified from Slides Created by: Erica Morrill
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Chapter 8-2 Chapter Focus Relative pay rates across jobs Different wages for identical skills Safety regulation Compensation for unpleasant or risky jobs
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Chapter 8-3 Theory of Compensating Wages Explain why some workers are paid more and others less, although their qualifications may be identical. Factors include: 1. Risk/safety (our focus) 2. Turnover in that position (e.g., Jobs in public and private sectors) 3. Probability of success in job
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Chapter 8-4 Isoprofit Schedule Combinations of wages and safety that the firm can provide and maintain the same level of profit Exhibits a diminishing marginal rate of transformation between wages and safety Lower curves imply higher levels of profits
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Chapter 8-5 Figure 8.1 a Isoproft Schedule A Firm is providing little safety and can provide additional safety in a relatively inexpensive manner B Firm is providing considerable safety and can provide additional safety only through the introduction of more sophisticated and costly procedures Wage Safety I h I o
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Chapter 8-6 Different Firms with Different Safety
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benjamin5_PPT_08 - Chapter Eight Compensating Wage...

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