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Wage Disparities between Tertiary and Primary Sectors

Explain two reasons why workers in the tertiary sector may be paid more than workers in the primary sector.

Category:

Labor Market and Income Distribution

Cambridge IGCSE MAY JUNE 2022

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Answer

Use economic formulas or equations when necessary and applicable.

There are several reasons why workers in the tertiary sector may be paid more than workers in the primary sector:
➡️1. Higher Demand: Workers in the tertiary sector often benefit from higher demand for their services. This can be attributed to factors such as higher productivity, profitability, and the expansion of tertiary industries. As the demand for these services increases, employers are willing to pay higher wages to attract and retain skilled workers in the sector.
➡️2. Lower Supply: Workers in the tertiary sector may require higher qualifications, skills, or education compared to those in the primary sector. This higher level of expertise reduces the overall supply of workers available for tertiary jobs, creating a scarcity in the labor market. The limited supply of skilled workers gives them more bargaining power, allowing them to negotiate higher wages.
➡️3. Stronger Bargaining Power: Tertiary sector workers, particularly those in professional occupations, often have stronger bargaining power due to the presence of trade unions or professional organizations. These collective bodies can negotiate better wages and working conditions on behalf of their members. In contrast, primary sector workers may have weaker bargaining power as their jobs can often be replaced by capital equipment, making it more challenging to demand higher wages.
➡️4. Government Policy: Tertiary sector workers may be more favored by government policies, such as increased investment in education and healthcare. These policies aim to enhance the quality and accessibility of services provided by the tertiary sector, which in turn can lead to higher wages for workers in those industries.
➡️5. Disparity in Economic Development: The wage disparity between workers in the primary and tertiary sectors can also be influenced by the level of economic development in a country. Tertiary sector workers are predominantly found in developed countries where wages and the cost of living tend to be higher. In contrast, primary sector workers are more common in undeveloped countries where wages and the cost of living are generally lower.
➡️6. Value of Goods and Services: The value of goods and services produced in the tertiary sector is often higher compared to those in the primary sector. Tertiary sector workers contribute to the provision of services that have a higher perceived value, such as healthcare, education, finance, and professional services. The higher value of these services translates into higher pay for workers in the tertiary sector.
It's important to note that these factors are not exhaustive, and the wage differentials between sectors can vary across countries and industries. Additionally, the specific dynamics of each labor market and the interplay between supply and demand for different types of labor can further influence wage disparities.

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I. 🍃Introduction
- Explanation of the topic
- Importance of understanding the factors affecting wages in primary and tertiary sectors

II. Higher demand
- Explanation of how higher demand affects wages in primary and tertiary sectors
- Examples of factors that can lead to higher demand

III. Lower supply
- Explanation of how lower supply affects wages in primary and tertiary sectors
- Examples of factors that can lead to lower supply

IV. Stronger bargaining power
- Explanation of how stronger bargaining power affects wages in primary and tertiary sectors
- Examples of factors that can lead to stronger bargaining power

V. Weaker bargaining power
- Explanation of how weaker bargaining power affects wages in primary and tertiary sectors
- Examples of factors that can lead to weaker bargaining power

VI. Government policy
- Explanation of how government policy affects wages in primary and tertiary sectors
- Examples of government policies that can affect wages

VII. Geographic location
- Explanation of how geographic location affects wages in primary and tertiary sectors
- Examples of how wages differ in developed and undeveloped countries

VIII. Value of goods and services
- Explanation of how the value of goods and services affects wages in primary and tertiary sectors
- Examples of how the value of goods and services can affect wages

IX. 👉Conclusion
- Summary of the factors affecting wages in primary and tertiary sectors
- Importance of considering these factors when analyzing wage trends.

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Logical explanation which might include: Higher demand - due to e.g. higher productivity / more profitable / expansion of tertiary industries -. Lower supply - due to e.g. higher qualifications/skills/education needed -. Stronger bargaining power - due to stronger trade unions / professional organisations -. Primary sector workers can be replaced by capital equipment - so bargaining strength is weak -. More favoured by government policy - e.g. increased government spending on education/healthcare -. Tertiary sector workers are mainly found in developed countries where wages / cost of living is generally high - whereas primary sector workers are mainly found in undeveloped countries were wages / cost of living are generally low -. Lower value of goods and services being provided in primary sector - lower pay for primary sector workers -.

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