Notesale: Turn your study into money

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The labour Market - Wage determination
Wage determination - Pay in a particular labour market, for example the market for
City executives or teachers, is influenced by a number of factors
...
The wage paid to a particular occupation will rise, following a rise in demand for
their services or a decrease in their supply
...


Economic rent and transfer earnings ~ demand for a supply of, labour are also
important determinants of economic rent ( the payment received by a factor of
production over and above that which is needed to keep it in its present occupation)
and transfer earnings ( the minimum payment needed to keep a factor of production at
its present use)
...

In the labour market, then, they are the equivalent to the minimum which has to be paid
to keep a worker in his or her current job
...

A trade union seeks to further the interests of its members through a process of
‘collective bargaining’ with employers
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4
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This need not be the case however
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This
creates the possibility for both increased wages and increased employment
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In a labour market a
monopsonist ( a single dominant buyer) employer is a firm which is the only buyer of
labour
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An example is the government , as
the main employer of soldiers in the national defence
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In order to employ more workers they have to increase
the wage rate
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Monopsony in a market with trade unions

In a monopsony labour market,a union can theoretically raise both the wage rate and
the level of employment , without a rightward shift of the MRP curve

Wage differentials - exist when labour markets are not perfectly competitive
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Wage
differentials can also have a regional dimension
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Conversely, wages will be relatively low where
supply is high compared to demand and when both demand and supply are elastic
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Similarly, public spending on health care has
increased, with an ageing population increasing the demand for surgeons
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Esteem - Some occupations are held in high public esteem, such as vets , surgeons and
barristers
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This will help to boost their perceived MRP, and could be seen as a form of positive
discrimination (see below)
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Wage differentials between particular groups ~ skilled and unskilled workers
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MRP is higher for a skilled
worker

Male and Female workers - men still receive higher wages than women despite equal
legislation
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Even if hourly rates of pay are compared , however, men still out earn women
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Part time and full time
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The supply of people willing and able to work part time is relatively
high compared to demand
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Pakistani workers, for example, receive relatively low pay
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Also the qualifications of Pakistanis, especially female, are typically lower than
the rest of the population
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Negative discrimination ~ perceived lower MRP due to prejudice
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Firms may, however, discriminate in favour of certain groups
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In this case, employees perceive the mrp of a particular group of workers
to be higher than it actually is
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