Earnings and Discrimination
Today in Ireland: an I.T. project manager earns - on average €51,362, per annum.
A dentist on average, earns €50,000 per year.
A binman earns on average €20,000-€25,000 per year.
Why does a bin man earn half as much as a dentist?
· Wages are determined by labour supply and demand.
· The marginal productivity of the labour will affect the labour demanded.
· The equilibrium point is where the employee receives payment, which reflects their marginal contribution to the economy’s production of goods and services.
Low paid jobs (such as jobs in waste disposal)
Disadvantages Advantages
Low wages Requires few skills
Little risk
Generally safe
No great experience required
Relatively easy
High paid jobs (such as dentistry)
Disadvantages Advantages
Need third level education high wages
Need job training
Long working days
Comes with major responsibility
A dentist on average, earns €50,000 per year.
A binman earns on average €20,000-€25,000 per year.
Why does a bin man earn half as much as a dentist?
· Wages are determined by labour supply and demand.
· The marginal productivity of the labour will affect the labour demanded.
· The equilibrium point is where the employee receives payment, which reflects their marginal contribution to the economy’s production of goods and services.
Low paid jobs (such as jobs in waste disposal)
Disadvantages Advantages
Low wages Requires few skills
Little risk
Generally safe
No great experience required
Relatively easy
High paid jobs (such as dentistry)
Disadvantages Advantages
Need third level education high wages
Need job training
Long working days
Comes with major responsibility
Characteristics, which affect Workers...
Compensating differential, Human Capital, Signalling, Ability, effort and chance, beauty, the superstar phenomenon.
Skills we gain from third level education
- Compensating differential: A difference in wages that arises from non-monetary characteristics of different jobs. Some jobs are less desirable then others because of unsociable hours or the danger they involve. These undesirable jobs are compensated by a higher wage.
- Human Capital is the investment that is put into in individuals in forms of education, experience and job training. The more human capital a person has the higher their earnings will be as companies (demanders of labour) would pay an educated worker more money then a non-educated worker as they have higher marginal productivity. This also gives people an incentive to go to university.
- Another view in that relates to education would be signalling. People with college degrees send a signal to employees that they have high ability. It also shows that this individual had gained a lot of skills through the process of their third level education.
Skills we gain from third level education
- Problem solving
- Reasoning and Critical thinking
- Writing
- Note taking
- Goal setting
- Time management
- Ability, effort and chance: Some people have a greater natural ability, than others as some people differ in physical and mental aptitudes.
than a general shop workers job.
- Beauty: Many people can earn money simply because of their good looks. A catwalk model simple has to be skinny and over 5ft 8 In order to get work, however models that have extreme beauty can get a lot more work at a higher rate of pay because they are more beautiful than your average model. For example super model Gisele Bundchen earned $45 million in the past year
- The Superstar Phenomenon is were popularity combined with technology can make an individual a superstar giving them the opportunity to earn a large salary. The market that superstars supply too have unique characteristics:
- Each consumer in this type of market wants the good supplied by the top producers of that market.
- The top producers in that market can sell that product to everyone in that market at a low price because they interlink their product with technology.
- Take Rihanna for instance, she is one of the best selling R 'N' B artist of today. Fans interested in her music will want to buy her albums, as other artists cannot act as a supplement for her fans. Rihanna has sold 162,000 copies of her album ‘good girl gone bad’ the album was priced at €16.99 when it was first released and is now being sold for around €8 depending on the shop. Technology has given Rihanna the ability to copy her album millions of times allowing all her music fans the opportunity to purchase her album at a reasonable price whilst allowing her to still make a fortune.
Above equilibrium wages: minimum wage laws, unions and efficiency wages.
We assume wages should be set at the equilibrium point on the labour supply and demand curve when this is not the case. Minimum-wage laws, unions and efficiency wages exist to protect the less skilled and inexperienced workers, as they would earn a lot less if the market was unregulated. A union represents and protects employees by bargaining with employers for better wage s and working conditions. The treat of strike action gives the union bargaining power. Efficiency wage theory states that some companies will pay employee a bit more then the minimum wage so that workers will be happy, remain loyal, which will reduce the companies training expenses as they would not have to constantly train new employees. It will also give the company a good reputation, which will attract the best employees in the market to their company. With this theory quantity in labour supplied would rise and the quantity of labour demanded would fall resulting in unemployment.
The economics of discrimination.
Discrimination: the offering of different opportunities to similar individuals who differ only by race, ethnic group, sex age, or other personal characteristics. This type pf discrimination occurs in the labour market. Women and minority ethnic groups are being discriminated against within the workforce, as they are the groups that earn the least. However human capital and other factors make it hard to prove that employers are discriminating.
Discrimination by employers.
It we examine Beckers taste model we can see that if two groups in society have the same human capital and job characteristics but one group is been paid a higher wage then the other it could be because of that particular employers taste and their desire to make profit. For example if the local Supervalu were paying Irish employees efficiency wages because they liked these employees and wanted to keep them happy but only paid Polish workers under the minimum wage because the Polish would accept this wage this would increase Supervalu’s profits.
However if Tesco down the road unlike Supervalu was not discriminating against its employees and paid all employees minimum wage, much to the dislike of the Irish, Tesco would find that more Polish people would look for work there. It would also by paying everyone the minimum wage it would reduce its wage cost per unit allowing them to make more profit then Supervalu and possibly allow them to push Supervalu out of the market.
Discrimination between customers and governments
Customers can support this discrimination by buying supervalues products even though they might cost a bit extra just to support Supervalu as they know that supervalu is supporting the Irish locals giving them jobs and good wages.
OR these customers might may not have a preference and would therfore buy there products from Tesco as Tesco's products are cheaper then Supervalu's. Tesco can afford to sell their products more cheaply because their costs of output(wages) are not as high as Supervalue.
Link to an article that gives an example of discrimination:
http://www.economist.com/node/21564408
Points to note from the article:
- The people of Hebei are being discriminated against. They have not been giving the same money earning opportunities as its neighbours are in Beijing.
- Factors that drive modern economies such as technological innovation and globalisation tend to benefit the skilled and educated
- In India cronyism is quite active, as assets such as coal deposits have been transferred from the sate to favoured insiders. In India generally rich businessmen are politicians and many politicians become rich businessmen. “The rich get richer, the poor get poorer”.
- There are also examples of cronyism in China within the article.
Bibliography
http://www.vasaprava.org/?p=1001&lang=en
http://www.nursinguniforms.net/blog/how-to-fight-discrimination-in-the-workplace
http://filipspagnoli.wordpress.com/2010/02/19/discrimination-a-collection-of-images/
http://geopolicraticus.wordpress.com/2010/02/09/shorting-the-euro/
https://www.goarmyed.com/public/facility_pages/NG_Nevada_Education_Services_Office/default.asp
http://www.greenlaunches.com/alternative-energy/red_fire_fighting_trucks_flaunt_a_green_solar_roof_in_pennsylvania.php
http://www.celebritynetworth.com/richest-celebrities/.../rihanna-/net-worth/