1.6.4 Wage determination in imperfectly competitive markets

Relative Wage Rates

The comparison of wages paid to different groups of workers in a labor market.

Imperfectly Competitive Labour Market

A labor market where either employers or workers have the power to influence wage rates.

Monopsony Power

The market power held by a single buyer (or employer) in the labor market to set wages.

Trade Unions

Organizations that represent the collective interests of workers regarding their pay and working conditions.

Monopsony

A market structure where there is a single buyer or a dominant buyer of labor.

Occupational Immobility

The inability of workers to move between jobs due to skills mismatch.

Geographical Immobility

The inability of workers to move to different locations for work.

Discrimination in Labor Markets

When workers are treated differently in hiring, wages, or employment opportunities based on non-job-related factors.

Imperfect Information

When all parties in a market do not have complete or accurate knowledge about market conditions.

Symmetric Information

A situation where all participants in a transaction have access to the same relevant information.

Asymmetric Information

A situation where one party in a transaction has more information than the other, leading to inefficiencies.

Minimum Price Control

A legal minimum wage rate set above the equilibrium wage to protect workers' earnings.

Collective Bargaining

The negotiation process between unions and employers to establish wages and working conditions.

Market Equilibrium

The point where the quantity of labor supplied equals the quantity of labor demanded.

Marginal Revenue Product (MRP)

The additional revenue generated from employing one more unit of labor.

Wage Rate

The amount paid to workers per hour, day, or piece of work.

Supply Curve

A graph showing the relationship between the price of a good and the quantity supplied.

Wage Rate Discrimination

The practice of paying workers differently based on criteria unrelated to their job performance.

Labour Market Failure

A situation where the labor market does not allocate resources efficiently, leading to employment issues.

Skill Shortages

A situation where employers cannot find workers with the necessary skills for available jobs.

Misallocation of Resources

An inefficient distribution of resources that results in wasted potential and reduced productivity.

Economic Well Being

The overall financial health and standard of living of individuals or groups in the economy.

Union Bargaining Power

The strength or influence that a trade union has in negotiations over pay and working conditions.

Employer’s Marginal Cost

The additional cost incurred by an employer to hire one more worker.

Empirical Evidence

Information acquired by observation or experimentation that supports or contradicts economic theories.

Monopsonist

A single buyer in the labor market who can influence wage rates.

Employment Level

The total number of people employed in the labor market at any given time.

Trade Union Role

To protect worker interests, negotiate pay, and enhance working conditions.

Impact of Unions

An increase in wage rates and employment levels due to collective bargaining.

Labour Demand

The quantity of labor that employers are willing to hire at given wage rates.

Labour Supply

The total number of workers available to work at given wage rates.

Price Rigidity

The condition where prices do not adjust quickly to changes in supply and demand.

Labour Market Regulation

Government policies that set rules guiding labor market transactions.

Area of Employment

The specific region or sector in which a person works.

Wage Differentials

The difference in wages between different groups of workers, reflecting differences in skill, location, or job type.

Disciplinary Procedures

Processes established by employers to address employee misconduct or performance issues.

Job Security

The assurance that an employee will keep their job without the risk of being made redundant.

Union Representation

The act of having a trade union advocate on behalf of workers during negotiations.

Wage Setting Practices

Methods employers use to determine how much to pay their workers.

Efficiency Wage Theory

The theory suggesting that higher wages may lead to increased worker productivity.

Market Correction

The process by which the market self-adjusts to eliminate excess supply or demand.

Productivity

The measure of how efficiently production inputs are converted into outputs.