Persistent wage differentials between people having different skills violate the W = MRP ethic associated with the perfectly competitive market for labor.

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, wage differentials based on different skills do not violate the W = MRP (Wage equals Marginal Revenue Product) ethic because wages are determined by the productivity of the worker. Workers with higher skills are expected to have a higher MRP and thus command higher wages.

Persistent Wage Differentials Between People Having Different Skills Violate the W