EC120 Lecture Notes - Lecture 22: Efficiency Wage, Perfect Competition, Market Power
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These variations can be explained by labour supply and demand. Labour demand reflects the marginal productivity of labour. In equilibrium, wages workers earn equals the marginal value that workers will contribute to the economies productivity. In canada university grad earn 45% more than high school grads: alternative view of education (signalling theory) i. ii. Firms use signaling theory to see who is at a high level. Difficulty of earning degree seperate people: ability, effort, chance, workers of greater skill and effort have greater value, therefore be paid more, wages are also affected by chance (ex. Tech exists that allows for supply at lowest cost i. ii. However, numbers are not definitive for many reasons. The proportion of white males and females differs substantially among different groups. A greater proportion of white males and females in the group of university grads. Women on average have less job experience than men. Greater proportion of males have university degrees.
