EC120 Chapter Notes - Chapter 19: Physical Therapy, Market Power, Human Capital
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EC120 Full Course Notes
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A typical farm worker earns about ,000/year. These variations are explained by labour supply and labour demand. Labour demand re ects the marginal productivity of labour (vmpl) In equilibrium, the wages workers earn equal the value of their marginal contribution to the economy"s production. There are many factors that affect productivity and wages: compensating differentials get paid more for doing jobs most people wouldn"t do. Compensating differential: a difference in wages that arises to offset the non-monetary characteristics of different jobs. These characteristics can include: unpleasantness, dif cult, safety e. g. , Coal miners and re righters are paid more than other workers with similar education to compensate them for the extra risks. Night shift workers are paid more than day shift to compensate for the lifestyle disruption of working at night ii, a) human capital better grades re ect higher productivity (i. e. 2. 0 gpa vs. 4. 0 gpa) Human capital: the accumulation of investments in people, such as education and on-the-job training.
