1. Introduction
2. Supply and Demand
3. Labor Market Decisions in the Neoclassical Model
4. Compensating Wage Differentials and Work Conditions
5. Internal Labor Markets; Dual and Segmented Labor Markets
6. The Effect of Labor Unions on Wages
7. Lesson 06 Assignment

Lesson 06 - Determination of Wages

At long last we get to start discussing the determination of wages. Much time has been devoted in earlier lessons to describing labor supply decisions and labor demand decisions in the neoclassical model. Critiques and alternative explanations have also been discussed. Now we finally get to put it all together to talk about how much workers are paid and different ways that pay is constructed. The lesson also turns to other explanations of wage determination and why wages vary so much between seemingly identical individuals.

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Topics Covered

1. Supply and Demand Together at Last
2. Compensating Wage Differentials and Working Conditions
3. Efficiency Wage Models
4. Internal Labor Markets
5. Dual and Segmented Labor Markets
6. Effects of Labor Unions
7. Politics and Policy

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Reading Assignment

• Lesson 06 Commentary
• Text(s):
• Unlevel Playing Fields: Chapter 4: Work and Wages in the Neoclassical Model, pp 65-74. (partial chapter)
• Unlevel Playing Fields: Chapter 7, Work and Wages in the Political Economy Approach, pp 130-158.
• Contemporary Labor Economics: Chapter 6: Wage Determination and the Allocation of Labor, pp 171-194.
• Contemporary Labor Economics: Chapter 8: The Wage Structure, pp 231-260.