ECON 10010 Chapter Notes - Chapter 19: Market Power, Making Money, Efficiency Wage
Document Summary
Some determinants of equilibrium wages: compensating differentials, good jobs have lower equilibrium wages than bad jobs, compensating differential: difference in wages that arises from nonmonetary characteristics of different jobs, examples of compensating differentials: Coal miners have a higher wage than other similar education level jobs because it is dirty and has long-term health problems. Night shift factory workers earn a higher wage than daily shift workers because higher wage compensates working and night and losing sleep. Firms are willing to pay more highly educated workers because these have higher marginal products. Union: worker association that bargains with employers over wages and working conditions. Unions often raise wages above equilibrium level. Threatened to withhold labor from the firm by causing a strike. Strike: organized withdrawal of labor from a firm by a union: theory of efficiency wages. Efficiency wages: above equilibrium wages paid by firms to increase worker productivity.
