Wage Differential Policies
To begin with it is useful to discuss briefly some of the methodological problems one encounters in conducting research into wage differentials. Naturally the most important problem is what to compare in order to receive a genuine picture of the state of wage differentials. The most frequently used method in the literature is to compare average wages of large groups, say for the whole economy, sectors of the economy or socioeconomic groups. It is obvious that this method is used because figures for such a comparison are readily available, and time-series figures for a comparison of employees’ earnings in certain occupations which might give a deeper insight into the evolution of wage differentials are missing. However it must be clear that comparisons with largely aggregated figures can serve only as a rough indication of the direction of development, particularly if they refer to a long period. Namely such figures are usually influenced by factors which are not necessarily a result of changes intended to affect wage differentials. The dynamics and structure of employment have an impact on the evolution of average wages. If the number of employed grows fast, say because of the rapidly expanding employment of women, most of whom in the past were unskilled and therefore belonged to the low-paid groups, this depresses average wages.
KeywordsMinimum Wage Manual Worker Wage Differential Average Wage Wage Increase
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