Presentation on theme: "Earnings, Productivity, and the Job market"— Presentation transcript:
1 Earnings, Productivity, and the Job market Chapter 13Earnings, Productivity, and the Job market
2 Overview Signaling Sources of earning differences Productivity and employmentEmployment discriminationNon-pecuniary job characteristicsCompensating wage differentialsAutomation and employment
3 effective time manager SignalingWho would you hire?A.B.Person APerson Bhard workinglazyintelligentunintelligentcritical thinkingspaces outpersistentquitterexperiencedinexperiencedeffective time managerdisorganized
4 Who Would You Hire? Scenario 1 Person APerson BPerson CSchool: HarvardDegree: Business AdministrationSchool: University of FloridaSchool: West Virginia Community College
5 Who Would You Hire? Scenario 2 Person APerson BPerson CSchool: Florida StateDegree: FinanceGPA: 3.4GPA: 4.0
6 Who Would You Hire? Scenario 3 Person APerson BPerson CSchool: Florida StateDegree: EconomicsGPA: 3.4Minor: MathSummer InternshipVolunteer WorkMinor: SociologyMinor: None
7 SignalingThe school you attend, the degree you get, the classes you take, your GPA, your internship experience, are all signals about yourself that you send to other people (including potential employers)
8 Sources of Earning Differences 1. Worker productivity and specialized skillsMore productive and more highly skilled workers earn more money.
9 Sources of Earning Differences Higher output per worker → higher wagesThis is true:A. Across countries: the reason employees in the U.S. make more than workers in most foreign countriesB. Across time: reason people make more today than they did 50 years ago
10 Sources of Earning Differences Tournament Pay: A type of compensation in which the top performer receives higher rewards than other competitors, even if the others perform at only a slightly lower level
12 Sources of Earning Differences 2. Worker preferencesGreater desire to make money = earn more money
13 Sources of Earning Differences 3. Race and GenderEmployment Discrimination: Restricting employment and earning opportunities on the basis of race, gender, or religion (not productivity)Employer based discriminationCustomer based discrimination
14 Employment Discrimination To isolate employment discrimination, we must:1. Adjust for differences between groups in education, experience, and other productivity related factors2. Make comparisons between similarly qualified groups of employees who differ only in regard to race (or gender or whatever you are testing).
17 Other Sources of Earning Differences Immobility of laborCost of living differences
18 Non-pecuniary job characteristics Non-wage characteristics of a job that influence how employees evaluate the jobSuch as:Working conditions, prestige, variety, location, freedom, responsibility, etc.
19 Compensating wage differentials Wage differences that compensate workers for undesirable non-pecuniary job characteristics
20 AutomationAutomation: production technique that reduces the amount of labor necessary to produce a good or serviceOften replacing people with machinesEx. Self check-out lines
21 AutomationIs automation destroying jobs and causing unemployment?
22 Review 1. What do we mean by signaling 2. Know the sources of earning differences3. Know the definition of tournament pay4. Know how to effectively study employment discrimination (or anything else)
23 Review5. Know what we mean by non-pecuniary job characteristics and compensating wage differentials6. Know the relationship between automation and employment.