Chapter 12 - Labor markets, poverty & income distribution

Earnings

________ differ among people in part because of differences in their human capital, an amalgam of personal characteristics that affect productivity.

Minimum wage laws

________ reduce total economic surplus by contracting employment.

Labor union

________: group of workers who bargain collectively with employers for better wages and working conditions.

Poverty threshold

________: level of income below which the federal government classifies a family as poor.

Winner take all labor market

________: one in which small differences in human capital translate into large differences in pay.

Customer discrimination

________: willingness of consumers to pay more for a product produced by members of a favored group, even if the quality of the product is unaffected.

negative income tax

The ________ is an expanded version of the earned- income tax credit that includes those who are not employed.

Employer discrimination

________: arbitrary preference by an employer for one group of workers over another.

Marginal product of labor (MP)

additional output a firm gets by employing one additional unit of labor

Value of marginal product of labor (VMP)

dollar value of the additional output a firm gets by employing one additional unit of labor

Human capital theory

theory of pay determination that says a worker's wage will be proportional to his or her stock of human capital

Human capital

amalgam of factors such as education, training, experience, intelligence, energy, work habits, trustworthiness, and initiative that affects the value of a worker's marginal product

Labor union

group of workers who bargain collectively with employers for better wages and working conditions

Compensating wage differential

difference in the wage rate (negative/positive) that reflects the attractiveness of a job's working conditions

Employer discrimination

arbitrary preference by an employer for one group of workers over another

Customer discrimination

willingness of consumers to pay more for a product produced by members of a favored group, even if the quality of the product is unaffected

Winner-take-all labor market

one in which small differences in human capital translate into large differences in pay

In-kind transfer

payment made not in the form of cash, but in the form of a good/service

Means-tested

benefit program whose benefit level declines as the recipient earns additional income

Negative income tax (NIT)

system under which the government would grant every citizen a cash payment each year, financed by an additional tax on earned income

Poverty threshold

level of income below which the federal government classifies a family as poor

Earned-income tax credit (EITC)

policy under which low-income workers receive credits on their federal income tax

Marginal product of labor (MP)

Additional output a firm gets by employing one additional unit of labor

Value of marginal product of labor (VMP)

Dollar value of the additional output a firm gets by employing one additional unit of labor

Human capital theory

Theory of pay determination that says a worker's wage will be proportional to his/her stock of human capital

Human capital

Amalgam of factors such as education, training, experience, intelligence, energy, work habits, trustworthiness, and initiative that affects the value of a worker's marginal product

Labor union

Group of workers who bargain collectively with employers for better wages and
working conditions

Compensating wage differential

Difference in the wage rate (negative/positive) that reflects the attractiveness of a job's working conditions

Employer discrimination

Arbitrary preference by an employer for one group of workers over another

Customer discrimination

Willingness of consumers to pay more for a product produced by members of a favored group, even if the quality of the product is unaffected

Winner-take-all labor market

One in which small differences in human capital translate into large differences in pay

In-kind transfer

Payment made not in the form of cash, but in the form of a good/service

Means-tested

Benefit program whose benefit level declines as the recipient earns additional income

Negative income tax (NIT)

System under which the government would grant every citizen a cash payment each year, financed by an additional tax on earned income

Poverty threshold

Level of income below which the federal government classifies a family as poor

Earned-income tax credit (EITC)

Policy under which low-income workers receive credits on their federal income tax