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Wage Differentials and Skill Levels

Question

Discuss whether or not skilled workers are always paid more than unskilled workers.

Category:

Labor Market and Income Distribution

Frequently asked question

Preview Answer

I. 🍃Introduction
- Explanation of the topic: Why skilled workers may be paid more than unskilled workers
- Brief overview of the reasons for and against this argument

II. Reasons why skilled workers may be paid more
- Shortage of skilled workers due to training and qualifications
- Inelastic supply and demand for skilled workers
- Higher productivity of skilled workers
- Stronger bargaining power of skilled workers
- Tendency of skilled workers to work in the tertiary sector
- Greater mobility of skilled workers

III. Reasons why skilled workers may not be paid more
- Less experience and fewer promotion opportunities for skilled workers
- Declining industries that employ skilled workers
- Importance of non-wage factors in job selection for skilled workers
- Lower wages for skilled workers in poorer countries compared to unskilled workers in richer countries

IV. Example of a Level ➡️3 answer
- Explanation of how demand and supply affect the wages of skilled and unskilled workers
- Discussion of the influence of qualifications, experience, and productivity on wage determination
- Explanation of how trade unions and derived demand can affect the bargaining power of skilled workers
- Discussion of the possibility of unskilled workers being paid more due to dangerous or undesirable working conditions

V. 👉Conclusion
- Recap of the reasons for and against the argument that skilled workers may be paid more than unskilled workers
- Final thoughts on the complexity of wage determination in different industries and countries.

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