wage differential

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Wage Differential

The difference in wage or salary between two employees of different classes who perform the same work. Examples of classes include age, gender, race, religion or even union and non-union membership. Wage differentials may be legal in some circumstances, but are generally illegal when based on gender, ethnicity, sexual orientation and similar classes.

wage differential


wage differential

the payment of a different WAGE RATE to different groups of workers. Wage differentials arise from three main factors:
  1. differences in inter-occupational skills, training and responsibilities (surgeons are paid more than nurses, managers are paid more than labourers);
  2. differences in inter-industry growth rates and PRODUCTIVITY levels (high-growth, high-productivity industries pay more than declining or low-productivity industries);
  3. differences between regions in income per head and local employment levels (prosperous areas in general pay more than depressed areas).

Wage differentials that encourage greater labour MOBILITY between occupations and industries and promote high levels of productivity play an important part in bringing about a more effective use of labour resources. On the other hand, some wage differentials contribute to both economic and social distortions, in particular those that reflect racial or sexual discrimination and the exploitation of workers by powerful employers (‘sweat-shop‘labour). By the same token, ‘unjustified‘wage differentials arising out of the abuse of trade union monopoly power equally mitigate against the best use of labour resources.

References in periodicals archive ?
The report, which shows the huge impact geography has on American salaries, analyzed employment and median salary numbers adjusted for local wage differentials, revealing the five worst- and five best-paying cities for each of the 20 hottest jobs today, from accountant to web developer.
The salaries of the top corporate executive class are rising sharply in a crawling economy, with widening wage differentials and income disparities.
Variation in culture, tradition, and ethnicity may support the phenomenon of the wage differential existence in the labour market.
The formula decomposes the wage differential into two main components.
Policies that increase real wage differentials lead to higher levels of migration, while those which reduce the wage differential lead to lower migration levels (Walmsley et al.
Hypothesis 3: The wage differential between minority and whites is lower for nonprofit employees than for profit employees.
Evidence of the marital wage differential for white men in the United States is extensive (see Ribar 2004, for a review).
This is especially bad news since production occupations have been exerting positive pressure on the state-nation wage differential primarily through the disproportionately large share of employment in these occupations, but also due to the higher average wage in Indiana relative to the nation (refer back to the middle tier of Table 1).
Years later, Selwyn would meet wealthy socialists, who had made fortunes out of the manipulation of Welsh television licences, who would insist on the classlessness of the Welsh towns, producing neat arguments about the narrowness of the wage differential then, but they were bolstering up myths that were useful to themselves.
Wage differential due to employer size is one of the key areas of interest in labour market research because a strong positive relationship between employer size and wages has been observed in developed and developing countries.
Apparently they are concerned at the wage differential between themselves and a few top civil servants.
On the other hand, wages in the host region could be less than that of the home region, so the wage differential would be a negative cost.