Business for Economics

Question: Discuss about theBusiness for Economics. Answer: Discussion Due to thoughtful influence created by wages for the livelihood of beneficiary is largely contested as the current issues prevailing in the present economic market across various occupations, which are intensely scrutinised. Variations amid numerous industries are explained through simple demand and supply mechanism. It is important to denote that in order to produce goods an organisation needs labour whereas the supply of labour in the labour market is limited (Brochu Green, 2013). Wages vary due to the limited amount of labour skill while performing a specific job. Wage Differentials The wage, which is paid to workers, varies greatly. Such difference is mostly due to the result of ability of the workers and the workers capacity to diligently perform a specific job. There is a significant amount of wage difference across different occupations due to the differences of demand and supply along with the degree of educations or training required to perform a desired level of work. Large number of governments have imposed minimum wage, which is the minimum amount of wages paid by the employer to a worker. The main objective of minimum wages is to enable the workers who are unskilled to earn a livelihood. As stated by (Addison et al., 2012) there are several number of economist who have viewed their critical opinion on the minimum wages. Economist have argued that differential wage structure reduces the employment level as few workers get the benefit from higher wages while other remains unemployed. Unemployment is largely due to the lower demand from high price of the labour. In addition to this, there are large number of people who are benefited from the minimum wages as because they do not need to maintain their daily living. Other argues that minimum wages is so minimal that it creates small impact on the actual employment as it helps in reducing the labour turnover. The census states that the reimbursement of the minimum amount of wage have the ability to o utweigh the drawbacks, as increase in the minimum wages has not created a measurable impact on employment (Georgiadis, 2013). Figure 1 Representing labour demand based on wage rate (Source Weiss, 2014) Occupational Wage Difference: It is worth mentioning that there are certain numbers of occupations, which pay more wages than the others do. For example, surgeons make more than the teachers do. Hence, it is rightly said that most of the wage difference arises due to the differences in the level of educations and training which is often sometimes referred to as human capital. Surgeons require usually requires more than 10 years of teaching and practical training after completion of high school before making a living wage as surgeon. Schooling and practical training restricts the supply of labour as they undertake definite quantity of time to achieve the desired level of skill. Another noteworthy factor, which determines the demand and supply of labour, is dependent on the product or services provided by the workers (Weiss, 2014). If the labour offers goods and services which is highly desirable in the consumer market then there will be a higher rate of prevailing wages for a given supply of workers who could perform a specified amount of job. Compensating Differentials: Some of the jobs require more pay because they are less desirable in the labour market. Performing such job may be hazardous, dirty and the degree of employment depends upon the seasons. For example, an individual employed in the work of construction is paid more than the retail sales due to the compensating differentials. These are non-monetary in nature due the differences in the rates of wages depending upon the desirability of jobs. In few occasions status or power might also be a contributing a factor in determining the compensating differences. Difference in Wages Due to Market Imperfections: In terms of the economic viewpoint, there is a belief that people will shift to those jobs which have higher pay from lower jobs of lower pay have same type of requirements (Khamis, 2013). However, this can take place only people look for jobs in their own locality. Hence, poor information can lead to prevailing differences in wage for the same type of jobs. Interactions between the degree of labour supply is depends upon the two factors which are namely price and the labour equilibrium. If there is a soaring demand for manual labour, which requires fewer skills, then such labour will fetch a high price and demand for such labour is usally high in the labour market. Hence, it should be noted that the overall structure of wages in a country is largely dependent upon the Gross domestic product along with the productivity of the worker. In order to determine the differences within the industries and occupations the above stated rules of labour equilibrium is still applicable so that the desired level of skills offer high amount of wages (Georgiadis, 2013). Whereas some of the other factors like labour experience and performance is often an important determinant at this level due to the higher amount of wages offered for positive productivity. On the other hand, other factors like wealthy and high cost area often cover high wages for higher similar work as because the wages offered must meet the cost of livelihood for an individual. Demographic structure of the workers also an important potential factor in the determination of wages. For instance, the prevailing situation of pay gap amid male and female has received much attention from every quarter. However, it is worth mentioning that the objectivity of information on this topic is unusual as opinionated points are often considered for discussion (Wilkinson, 2013). In most of the cases, a perceived gap among the economic and business factors can be explained with the help of experience and continuity within the organisation. To conclude with, there are large number of occupations that pay a wage rate, which is commensurable with performance as performance pay help to solve the principle problems of wages in occupations and industry. Reference List: Addison, J. T., Blackburn, M. L., Cotti, C. D. (2012). The Effect of Minimum Wages on Labour Market Outcomes: Countyà ¢Ã¢â€š ¬Ã‚ Level Estimates from the Restaurantà ¢Ã¢â€š ¬Ã‚ andà ¢Ã¢â€š ¬Ã‚ Bar Sector.British Journal of Industrial Relations,50(3), 412-435. Brochu, P., Green, D. A. (2013). The impact of minimum wages on labour market transitions.The Economic Journal,123(573), 1203-1235. Dustmann, C., Frattini, T., Preston, I. P. (2013). The effect of immigration along the distribution of wages.The Review of Economic Studies,80(1), 145-173. Georgiadis, A. (2013). Efficiency Wages and the Economic Effects of the Minimum Wage: Evidence from a Lowà ¢Ã¢â€š ¬Ã‚ Wage Labour Market.Oxford Bulletin of Economics and Statistics,75(6), 962-979. Khamis, M. (2013). Does the minimum wage have a higher impact on the informal than on the formal labour market? Evidence from quasi-experiments.Applied Economics,45(4), 477-495. Lindley, J., Machin, S. (2014). Spatial changes in labour market inequality.Journal of Urban Economics,79, 121-138. Weiss, A. (2014).Efficiency wages: Models of unemployment, layoffs, and wage dispersion. Princeton University Press. Wilkinson, F. (Ed.). (2013).The dynamics of labour market segmentation. Elsevier.