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 ?
Two wage differential metrics were applied to weight local income differences: One compared each occupation's local median salary to the median salaries of all jobs in the area, the other compared each occupation's local median salary to its national median salary (with the first metric weighted twice as heavily as the second).
We will make suitable changes in banking regulations, if necessary, to address the issue of abnormal wage differentials in the sector," he promised.
Racial and gender prejudice is financially costly to those who practice it (limiting its extent), but non-prejudicial employers will hire the workers disfavored by discriminating employers, largely wiping out discrimination-based wage differentials.
The second explanation is that continued increases in the relative demand for high-skilled labor, in the face of a stagnant relative supply of high-skilled labor, have played an important role in increasing wage differentials since the 1980's [Autor, Katz, and Kearney (2008); Goldin and Katz (2009); and Katz and Autor (1999)].
Wage differentials between workers in the labour market may arise due to different social and economic reasons.
The analysis here contributes to this literature by focusing on the estimation of selectivity-corrected gender-based and public-private wage differentials, using a joint model of work status allocation and wage determination for Egypt and Jordan.
Changes in the number of migrants can occur in two ways in the GMig2 model: as an exogenous change in the supply and/or demand for migrant workers, such as changes in quotas; or as endogenous movements of migrant workers in response to wage differentials.
Conducting research on wage differentials of Generation Y employees can help practitioners better understand how they are compensating this particular group before implementing human resource suggestions.
In our final analyses, we examine the extent to which these individuals, henceforth called "stayers," drive the marital wage differentials observed in cross-sectional analysis to see if differences observed between panel and cross-sectional estimates are driven by differences in the nature of the identification process.
The wage differentials between staff on the Minimum Wage and higher paid, more skilled, employees are in some cases very small.
1) In literature various theoretical explanations are forwarded to support the existence of wage differentials across the employer size.
Chapters eight, nine, ten and eleven on wage differentials and wage fixation and executive compensation focus on differentiating factors of different jobs like hardships, safety etc.