1. How Wages are Determined
Unit 9.1

2. Labor: Supply and Demand
Wages
Compensation for labor
Not Profit
Equilibrium Wages
The point at which the amount of labor demanded and the amount of labor supplied are the same at this wage.
Derived Demand
The employer does not want to hire people he does not need

3. Why Wages Differ Wage Rates Human Capital Working Conditions
According to standard economics, money is used to incentivize work, and a business will pay more for performance.
To recruit top talent, it is considered normal to increase the amount of pay on an increasing scale, based on experience, past performance, and general ability.
This scale increases at a non-linear rate for the very top performers.
Human Capital
We are all different in our skills and abilities
Working Conditions
Some jobs are dangerous, some require special conditions or long contracts, travel
Discrimination
Government Actions
Minimum wages
Licenses

4. Wages and Benefits in the Labor Market
Typically when labor is abundant, wages and benefits are decreased. These kinds of situations are called surpluses of labor.
When the labor market tightens, companies have to compete to get labor, so wages and benefits increase in order to attract workers.
Since businesses tend to like labor surpluses (because they lower wages), a labor surplus is generally thought of as good within business circles.
Globalization has this effect on the labor supply, and this is used to push down labor costs.
Percentage of Wages Paid During Maternity Leave around the World

5. Income Distribution
Income and wealth are different measures of overall economic wellbeing.
Income represents moneys acquired during a year, wealth represents the value of all assets.

7. Labor: Benefits
Benefits are a tricky issue, since the cost of some benefits, especially medical insurance, has gone up so radically, it becomes very difficult for businesses to continue to offer these benefits.
As costs go up, it is becoming common for employers to reduce benefits to workers, in order to keep total costs down and remain competitive on the market.