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Earnings, Productivity, and the Job market

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Presentation on theme: "Earnings, Productivity, and the Job market"— Presentation transcript:

1 Earnings, Productivity, and the Job market
Chapter 13 Earnings, Productivity, and the Job market

2 Overview Signaling Sources of earning differences
Productivity and employment Employment discrimination Non-pecuniary job characteristics Compensating wage differentials Automation and employment

3 effective time manager
Signaling Who would you hire? A. B. Person A Person B hard working lazy intelligent unintelligent critical thinking spaces out persistent quitter experienced inexperienced effective time manager disorganized

4 Who Would You Hire? Scenario 1
Person A Person B Person C School: Harvard Degree: Business Administration School: University of Florida School: West Virginia Community College

5 Who Would You Hire? Scenario 2
Person A Person B Person C School: Florida State Degree: Finance GPA: 3.4 GPA: 4.0

6 Who Would You Hire? Scenario 3
Person A Person B Person C School: Florida State Degree: Economics GPA: 3.4 Minor: Math Summer Internship Volunteer Work Minor: Sociology Minor: None

7 Signaling The 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 skills More productive and more highly skilled workers earn more money.

9 Sources of Earning Differences
Higher output per worker → higher wages This is true: A. Across countries: the reason employees in the U.S. make more than workers in most foreign countries B. 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

11 Examples of Tournament Pay

12 Sources of Earning Differences
2. Worker preferences Greater desire to make money = earn more money

13 Sources of Earning Differences
3. Race and Gender Employment Discrimination: Restricting employment and earning opportunities on the basis of race, gender, or religion (not productivity) Employer based discrimination Customer based discrimination

14 Employment Discrimination
To isolate employment discrimination, we must: 1. Adjust for differences between groups in education, experience, and other productivity related factors 2. Make comparisons between similarly qualified groups of employees who differ only in regard to race (or gender or whatever you are testing).

15 Employment Discrimination

16 Employment Discrimination
Women Actual Adjusted White 100 African-American 77 84 89 92 American Indian 79 94 98 Asian-American 104 91 107 Mexican-American 65 88 73 93 Other Hispanic 75 83

17 Other Sources of Earning Differences
Immobility of labor Cost of living differences

18 Non-pecuniary job characteristics
Non-wage characteristics of a job that influence how employees evaluate the job Such 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 Automation Automation: production technique that reduces the amount of labor necessary to produce a good or service Often replacing people with machines Ex. Self check-out lines

21 Automation Is automation destroying jobs and causing unemployment?

22 Review 1. What do we mean by signaling
2. Know the sources of earning differences 3. Know the definition of tournament pay 4. Know how to effectively study employment discrimination (or anything else)

23 Review 5. Know what we mean by non-pecuniary job characteristics and compensating wage differentials 6. Know the relationship between automation and employment.

24 Thank You!

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