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Wage determination :!!:, Government Intervention :!!:, Inelastic supply…
Wage determination :!!:
Definition: Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. Globalisation has increased the production of goods and services.
The wage rate or labour is determined by the demand for labour and the supply for labour and their relative elasticity.
In an economy where labour is homogenous and all markets are perfect, wage rates would be identical for all workers.
Wage differentials are caused partly by imperfections and partly by differences in individual labour characteristics.
In the real world, workers are not identical; they differ. For example how hard or long they are willing to work and levels of human capital.
In particular, the marginal revenue product curve is different for each job.
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