Wage differentials due to cross- worker differences in human capital

Question

Quizplus · Accepted Answer

Wage differentials due to cross-worker differences in human capital will persist in a competitive equilibrium because individuals with more human capital (e.g. education, skills, training) are more productive and are therefore able to command higher wages. This is a justifiable outcome on efficiency grounds as it incentivizes individuals to invest in their human capital, ultimately leading to overall economic growth.

Wage Differentials Due to Cross- Worker Differences in Human Capital