IGCSE Economics Paper-2: Specimen Questions with Answers 38 - 38 of 100

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Passage

“Economic and social conditions are giving profession choosing criteria and should be in accordance with labor market providing and the youngers expectations and needs. Job stability, salary, company reputation, prospects for promotion or opportunity to practice as many jobs are currently most common criteria”

Question 38 (2 of 5 Based on Passage)

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Short Answer▾

What are the reasons behind wage differentials?

Explanation

The Reasons for Wage Differentials Are

Occupational Differences

In organizations occupations differ from one another in terms skills and responsibilities due to which wages in an organization differ from one another. Skill requirement is a major reason for the manpower planning.

Inter-Firm Differentials

In different plants in the same area of occupation there exists a wage differential of workers. Various factors like differences in quality of labor in different firms, different efficiency of equipment՚s and supervision results in the differences of wage in the labor market.

Regional Differences

Wages also differ in workers working in same occupation but at different geographical region apart from wage differentials due to occupation. Such differences arise due to the working conditions in different regions of the country.

Inter-Industry Differences

Differences in wages also occur due to the same area of occupation but in different industries. It is because of the varying skills, nature of the product, ability to pay, stage of development of industry etc.

Personal Wage Differences

Personal characteristics of like age, sex etc. of workers causes differential wage of the workers working in the same unit and occupation. Provision of ‘equal pay for equal work’ does not prevail. There are instances where women workers are paid less in comparison to the men doing the same job.

Why Do Wages Differ?

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