ECON-110 FA3 Lecture 7: Microeconomics notes 9/16/16
22 Oct 2016
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Compensating differential: market-driven wage adjustments to compensate for different working conditions. Ex: prostitution in india: some prostitutes make their customers wear condoms and some don"t. The ones that don"t get paid more to compensate for their extra risk. Wage premiums are huge between safe and unsafe. Gives firms an incentive to invest in job safety because employer can make wages lower if they make workplace safer. Osha penalties are lower than wage premiums ( billion v. . Preferring one group of workers over another, even if both groups have the same productivity. Discrimination can be from employers, customers, government. Employers: bigoted employers pay more to favored workers than equally-productive disfavored workers. It"s expensive females get 0. 8 of what men get so technically they would pay less. Non-bigoted companies have higher costs than bigoted companies. Companies can make higher profits by hiring disfavored workers. Male college grads and female college grads in their 20s wage gap doesn"t exist.
