Unformatted text preview: 3 4 Labour (thousands of hours per day) Skill Differentials
Wage rate (dollars per hour)
Compensation for cost of acquiring skill SH SL 10.00 8.50 5.00 0 1 2 3 4 Labour (thousands of hours per day) Skill Differentials level of At a given
Wage rate (dollars per hour) The result is a higher wage employment, highskilled workers must be compensated for the cost of S their skill acquiringH 10.00 At a given wage rate, more high-skilled labour is demanded because it has a greater MRP. SL 5.00 0 DL
1 DH 2 3 4 Labour (thousands of hours per day) Education and Earnings Wage Differentials Between the Sexes Wage Differentials Between the Sexes
Four Possible Explanations for earnings differences: Job types Discrimination Differences in human capital Differences in the degree of specialization Discrimination
Wage (thousands of dollars/year) Women S 40 20 Discrimination No discrimination MRPDA 0 1 2 MRP Investment advisors (thousands) Differences in Human Capital
The more human capital a person possesses, the more that person earns, everything else being equal.
There are three main indicators: Years of schooling (in recent years, a med...
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- Fall '14
- Distribution of wealth, wage rate