Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 19: Problem 8

For each of the following situations in which similar workers are paid different wages, give the most likely explanation for these wage differences. a. Test pilots for new jet aircraft earn higher wages than airline pilots. b. College graduates usually have higher earnings in their first year on the job than workers without college degrees have in their first year on the job. c. Full professors command higher salaries than assistant professors for teaching the same class. d. Unionized workers are generally better paid than non-unionized workers.

Short Answer

Expert verified
Answer: Test pilots for new jet aircraft earn higher wages than airline pilots because they face higher risks and require specialized skills. Test pilots often fly unproven or experimental aircraft, exposing themselves to potentially dangerous situations. They may also need additional training and certifications to handle these unique circumstances. Therefore, the higher wages serve as compensation for the increased risk factors and specialized skills.

Step by step solution

01

a. Test pilots vs. Airline pilots

Test pilots for new jet aircraft earn higher wages than airline pilots because they face higher risks and require specialized skills. Test pilots often fly unproven or experimental aircraft, exposing themselves to potentially dangerous situations. They may also need additional training and certifications to handle these unique circumstances. Therefore, the higher wages serve as compensation for the increased risk factors and specialized skills.
02

b. College graduates vs. Workers without college degrees (first year on the job)

College graduates usually have higher earnings in their first year on the job compared to workers without college degrees because they have invested time and money in their education, which generally leads to acquiring more skills and knowledge. Employers may perceive them as more qualified or capable of performing at a higher level in the job, justifying their higher wages. Furthermore, having a college degree may open the door to more lucrative industries or positions which tend to have higher salaries.
03

c. Full professors vs. Assistant professors (teaching the same class)

Full professors command higher salaries than assistant professors for teaching the same class due to differences in experience, seniority, and qualifications. Full professors have generally published more research, have more years of experience in teaching and research, and hold more prestigious positions within their academic institutions. As a result, they enjoy higher salaries than assistant professors, who are often at the beginning of their academic careers and still building their reputation within their field.
04

d. Unionized workers vs. Non-unionized workers

Unionized workers are generally better paid than non-unionized workers because unions negotiate wages and benefits on behalf of their members. This collective bargaining power often results in higher wages, better working conditions, and more comprehensive benefits packages for unionized employees compared to their non-unionized counterparts. Additionally, unions may set minimum wage standards or salary scales for their members, leading to more consistent and potentially higher pay across the board for union workers.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Greta is an enthusiastic amateur gardener and spends a lot of her free time working in her yard. She also has a demanding and well-paid job as a freelance advertising consultant. Because the advertising business is going through a difficult time, the hourly consulting fee Greta can charge falls. Greta decides to spend more time gardening and less time consulting. Explain her decision in terms of income and substitution effects.

A New York Times article observed that the wage of farmworkers in Mexico was \(\$ 11\) an hour but the wage of immigrant Mexican farmworkers in California was \(\$ 9\) an hour. a. Assume that the output sells for the same price in the two countries. Does this imply that the marginal product of labor of farmworkers is higher in Mexico or in California? Explain your answer, and illustrate with a diagram that shows the demand and supply curves for labor in the respective markets. In your diagram, assume that the quantity supplied of labor for any given wage rate is the same for Mexican farmworkers as it is for immigrant Mexican farmworkers in California. b. Now suppose that farmwork in Mexico is more arduous and more dangerous than farmwork in California. As a result, the quantity supplied of labor for any given wage rate is not the same for Mexican farmworkers as it is for immigrant Mexican farmworkers in California. How does this change your answer to part a? What concept best accounts for the difference between wage rates for Mexican farmworkers and immigrant Mexican farmworkers in California? c. Illustrate your answer to part b with a diagram. In this diagram, assume that the quantity of labor demanded for any given wage rate is the same for Mexican employers as it is for Californian employers.

You are the governor's economic policy adviser. The governor wants to put in place policies that encourage employed people to work more hours at their jobs and that encourage unemployed people to find and take jobs. Assess each of the following policies in terms of reaching that goal. Explain your reasoning in terms of income and substitution effects, and indicate when the impact of the policy may be ambiguous. a. The state income tax rate is lowered, which has the effect of increasing workers' after-tax wage rate. b. The state income tax rate is increased, which has the effect of decreasing workers' after-tax wage rate. c. The state property tax rate is increased, which reduces workers' after-tax income.

In 2013, national income in the United States was \(\$ 14,542.4\) billion. In the same year, 137 million workers were employed, at an average wage, including benefits of \(\$ 64,667\) per worker per year. a. How much compensation of employees was paid in the United States in 2013 ? b. Analyze the factor distribution of income. What percentage of national income was received in the form of compensation to employees in \(2013 ?\) c. Suppose that a huge wave of corporate downsizing leads many terminated employees to open their own businesses. What is the effect on the factor distribution of income? d. Suppose the supply of labor rises due to an increase in the retirement age. What happens to the percentage of national income received in the form of compensation of employees?

Jameel runs a driver education school. The more driving instructors he hires, the more driving lessons he can sell. But because he owns a limited number of training automobiles, each additional driving instructor adds less to Jameel's output of driving lessons. The accompanying table shows Jameel's production function per day. Each driving lesson can be sold at \(\$ 35\) per hour. Determine Jameel's labor demand schedule (his demand schedule for driving instructors) for each of the following daily wage rates for driving instructors: \(\$ 160, \$ 180,\) \(\$ 200, \$ 220, \$ 240,\) and \(\$ 260\)
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free