The paper " Labour Economic" is a wonderful example of an assignment on macro and microeconomics. This is because, in wage systems, the comparative prices of labour are used in the allocation of labour to its most productive use and in the encouragement of human capital development, for instance, education into areas of yielding the greatest return (Steven 2005). Moreover, higher wage rate, for instance in private schools are used in compensating the teachers for undesirable job characteristics and in making sure that the equality of supply and demand for such undesirable employment.
This is because in private schools there is an extra workload and there more strict regulations when compared to public schools. Even if private schools have better job characteristics, in compensating wage differentials, varying wages are paid to different employees or employees within different markets that regulate for differences within their jobs or within the productivity of the employees. And in this regard, wage differentiation takes place for several reasons. In most cases, they occur because of individual preferences of the workers. For example, the teachers at public schools are willing to “ buy” free time or other kinds of household production by taking lesser wages.
Variations within job risks, education as well as location are among the reasons for the constant wage differentials (Steven 2005). Wage differentials within the labour market are regularly compensating wage differentials. Even though the private schools have better working conditions, the relative pay more because of the undesirable working conditions, for instance, the higher workload in private schools as compared to lesser workload in public schools. Teachers in public schools find the time to attend their household activities and other productive activities because of their free time. The main reason as to why the above statement is false is; the differential wages do not come as a result of only working conditions.
Moreover, higher wages in private schools are mostly used in compensation of higher productivity as well as offer returns on investment in education since private schools main aim is to attract more student for higher returns.
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