Wage Determination Essay Example
What are the main factors which might generate different wages for similar jobs in a particular industry?
Under what circumstances would such differences be Discriminatory? Varying wage is provided for the same job in a particular industry for various reasons. The supply-demand model is applied to the most competitive labor market in the organization that is put on stake. The number of the workers who are willing and have the ability to do a certain kind of job represents the supply side. For example, the sods care. The demand side is a representative of the number of such jobs that are available. In cases where the supply of workers for a particular job is limited and the demand workers demand is higher, then the wage for that job will be varying in different scopes. An increase is supply or a decreases in the demand relative to a certain job, is able to result to the lowering of wages and their rise competitively hence people doing same job end up receiving varied payments.
Factors that play part in wages determination include the relative skill sets and experience in addition to the education. A controversial factor that is as well considered is whether the particular employee is a member of a labor union or not. The demographics of the industry location and its classification are also considered in the wage determination process.
In an industry, the role of the employer is a determinant in wage determination. Some allow the employee attributes to determine wages despite the fact that the industry and the job title are similar. The government determined and advocated for minimum wage does affect wage disparities as well. This is because, an industry has the freedom of determining what they want to pay as wages provided it is above the advocated for minimum wages. Discrimination against the feminine gender does as well determine the wage disparities in an industry despite having to do the same work.
It is commonly considered that the young people are supposed to be paid more due to their ability and high energy to execute responsibilities. This is as opposed to the old folk who are slow at work. Due to such an argument, then the wages are varied. The relative individual experience as far as the execution of various tasks is concerned is one of the factor that lead to wages disparities. This is because a more experienced employee would feel underrated if he or she were made to take home the same package as afresh graduate.
A company policy on employment does as well determine wages and their variability in an organization. Despite the undertaking of same tasks, under the same title, wages may be varied due to the policies that were drafted during each of the workers recruitment. The wage differences are discriminating on the ground that the entire involved employees are doing the same magnitude of the job yet their remuneration is varied.
These factors are discriminatory based on them not being fairly practiced. This is in cases where the policies such as age and gender are given more priority at the expense of the young or the aged or men against women or female gender. When the policies for instance are drafted to favor family relations and friend then, discrimination will be practiced in that context.
What determines how many hours of labor an individual will be prepared to supply?
If the wage increases, will the individual’s supply of labor always increase? If not, Why not? The determinants of the number of labor hours an individual is willing to supply are monetary and no-monetary considerations. They encompasses the real wage rates that the synergy of the industry if offering to its employees; the higher rates are associated with the rise in factor rewards and they do boost the number of hours one is willing to put into work.
Substitute occupations do affect the hours that one is willing to put into work. The wage rates on offer in a competing job do as well affect the wages and the earnings differential between two jobs that are substitutes. Such variations in the total earnings affect the amount of hours that a worker is willing to put into work. For example, in recent years in Britain, a trend is recognizable of workers moving from the high-level university research to the household services because the pay rates and the potential earnings are much greater.
Barriers to Entry
The limits to a job shift due to the entry barriers such as the minimum requirements and other legal bottlenecks does as well affect the hours that a worker puts into work. The barriers make the employee more attached to the particular undertaking hence making him or her to put more into it.
The occupational mobility of labor
An improvement for instance in the occupational mobility of labor, will make the workers be willing to put a shorter duration into work and move put to look for the greener pastures while decreases in the mobility makes the employees to put more into their current employers.
The non-monetary characteristics of the particular jobs
These do as well affect the time that an individual worker is willing to put into the current job. They include factors such as the risks associated or the requirement to work unofficial hours and other non-pecuniary benefits. These include the security of the job, promotional opportunities and the in work advantages such as pension schemes. An increase in the wages does not always result to the individual rise in the labor supply. The wage increment will thus in this context, not result to an increment in labor supply. The reason behind such a behavior is that the individual may not be motivated by the monetary gains but other variables as well. It may be requiring an individual to be supplied with the pension schemes, risk allowances, and respective equipment that will make his or her work easier for him or her to be willing and able to give more labor supply. Just availing the monetary rewards at the expense of the other critical factors, makes it hard for an individual who for instance needed job security to be willing to give more.
Why is it argued that a monopolist will always produce less at a higher price than if the same industry were perfectly competitive and this results in a loss of social Welfare. Do these arguments have practical and policy relevance?
A monopoly in simple terms is a sole trader though it is difficult to have such a situation in an industry. According to the claims of the cost theory, the point at which profit maximization is achieved happens when the marginal revenue does cross the marginal overheads. This is linked to the fact that all the super profits are harvested until this point. Due this, the monopolistic will produce less when the prices are high.
A monopoly normally produces less when the prices are high because the monopolistic manufacturer would like to limit the product in the market so that the prices continue to go up and realize more profits. A monopoly is subject to no or little compettaition, which it is able to constrain and this makes it to produce less when the prices are higher. The organization is the only commander of the market and wishes to remain in business for longer. Due to this, the organization does limit its production process, so that goods it avails to the market can appreciate.
The monopolistic does as well produce less when the price of its products is higher because the economies of scale are under exploited. In addition, there is a decrease in the organizational revenues. Such makes the organization to lack the incentive to further produce goods through which they would check their average costs and the prize of their produce to their consumers.
Producing less when the price is higher, is limiting the efforts to satisfy the product demand. It is an undertaking that does spoil the organization social welfare significantly. This because, who reasonable person could withdrawal his or her products from the market when they are fetching higher prices if he was supporting of the society? The approach by the monopolistic organization, to produce less when prices are higher, yes results to the loss of social welfare.
According to the monopolistic industry policies and approaches to management, these approaches are practical and as per the policy relevance. This is because, the monopolistic should be able to enjoy the benefits of being a monopoly, and producing less when the prices are higher, is one of the policies, which as a monopoly should realize benefit due to its existence. To sum this up, the arguments that are involved in the current situation do have the practical and policy relevance as desired, and outlined by the monopoly existence policy.