EC120 Chapter Notes - Chapter 19: Sidney Crosby, Signalling Theory, Profit Motive

• School: WLU
• Department: Economics
• Course: EC120
• Professor: Houman Mortazavi

Document Summary

Dull, dangerous, and boring jobs pay more than safe, fun, and easy jobs to incenivize people to do that job. Compensaing diferenial- a diference in wages that arises to ofset the nonmonetary characterisics of diferent jobs. Human capital- the accumulaion of investments in people, i. e. educaion and on-the- job training. People vary in their natural abiliies, therefore many personal characterisics determine how producive workers are and the wages they earn. An alternaive view: when people complete a university degree they signal their high ability, rather than becoming more producive. Human capital theory- educaion makes workers more producive. Signalling theory- educaion is correlated with natural ability. If wages goes up, demand for labour goes down.