Job Market Why do earnings differ individuals have different skills demand for workers who are highly productive is greater than for those who are less productive Ex Steph Curry those that invest in themselves will be more productive which means they will have higher earnings Ex Tristan Thompson more education higher earnings worker preferences some people highly value money others value family and time race and gender employment discrimination can limit earnings opportunities the mark of incarceration in Milwaukee had identical resume and applied to low wage jobs such as warehouse workers restaurants etc measured the call back rate No Felony White 34 Black 14 Felony 17 5 Why should you take more math math signals problem solving non identical jobs dangerous job Location Working hours Strenuous nerve wracking Travel immobility of labor costly to move so labor supply is slow to react to changes in demand Compensating wage differentials wage differences that compensate workers for undesirable characteristics of their job Gender Wage Gap men and women have roughly the same age years of school marital status location and language Employment discrimination firms profit motive Other discrimination Marital Status before 1980 men primary breadwinners 1 Continuously in the labor market 2 Relocate if necessary 3 Accept jobs with long hours travel and inflexibility Gender roles in child rearing affect income Career choices and objectives 1 Educational choices 1968 27 expect to work at 35 1980 79 expect to work at 35 Currently women are 57 of college graduates Other discrimination Women tend to major in humanities nursing and education Men tend to major in business finance and engineering Future More graduating more advanced degrees gender wage gap should close America s millionaires of millionaires went from 3 9 million in 15 years Millionaires tend to be well educated disproportionately self employed and achieve wealth through saving and investment Productivity and Earnings high productivity is the underlying source of high wages earnings worker is much higher in the U S than China India more education work with more productive machines and there is better organization computers automation good or bad for wages In the long run automation increases wages due to increased productivity In the short run it depends if automation is a substitute or a complement Ex miracle toothpaste
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