Practice question · Match the pairs
Match each wage pattern to its economic explanation.
- Surgeons earn multiples of the median
- Night shifts pay a premium
- Wages rise with experience
- Star athletes earn extremes
- Scarce skills after years of human capital
- Productivity grows with accumulated skills
- Compensating differential for hard conditions
- Tiny supply meeting global demand
Hints
- Wage gaps are mostly supply and demand in disguise.
- Scarcity, unpleasantness and accumulated skill all get priced.
Show the answer
- Surgeons earn multiples of the median → Scarce skills after years of human capital
- Night shifts pay a premium → Compensating differential for hard conditions
- Wages rise with experience → Productivity grows with accumulated skills
- Star athletes earn extremes → Tiny supply meeting global demand
Why
Wage differences are mostly supply and demand wearing biographies: scarcity, unpleasantness, and accumulated skill all get priced.
Practise Labor Economics
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