Wage Differentials (Cambridge (CIE) IGCSE Economics)
Revision Note
Written by: Steve Vorster
Reviewed by: Jenna Quinn
Reasons for Differences in Pay
Workers are paid different amounts (wage differentials) due to a number of factors, including
Gender pay differences
Industrial sector pay differences
Private and public sector pay differences
Differences in pay between skilled and unskilled worker
Reasons for wage differentials between men and women
Men usually work full-time whereas women often work part-time in order to meet the demands of motherhood/childcare
Men usually have an uninterrupted career journey whereas women often take time away from work (motherhood/family) and so miss opportunities for advancement
Women are more likely to accept a job below their skill or quantification level if it fits in with the needs of looking after their children
The gender pay gap is a form of discrimination and occurs when a women is paid less than a man who is doing exactly the same job
Reasons for wage differentials in the primary, secondary and tertiary sectors
Primary sector workers are usually paid low wages due to the unskilled nature of the job and the fact that raw materials often generate the lowest profits in the production chain
Secondary sector workers add value to the raw materials and these products sell for higher profits. Therefore wages tend to be higher than primary sector wages
Tertiary sector workers are paid the highest. Their jobs often require highly valued skills that take years to acquire and the products they sell or services they provide can be complex and expensive e.g. artificial intelligence coders
Reasons for wage differentials between private and public sector workers
Public sector organisations are owned and controlled by the Government
Private sector organisations are owned and controlled by private individuals and firms
Reasons for Wage Differentials Between Private and Public Sector Workers
Private Sector Workers | Public Sector Workers |
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Reasons for wage differentials between skilled and unskilled workers
Many economies have a high supply of unskilled labour. This means that employers can push wages down as there is always someone willing to work for less (take it or leave it approach to wages)
To become skilled takes time and money which means that there is a more limited supply of specific skillsets. In recognition of these factors, wages for skilled workers are higher
Examiner Tips and Tricks
This topic is often examined in Paper 2 structured questions. A favourite approach is to ask a 'discuss' question which focusses on one area, but requires you to have knowledge of the other areas in order to fully answer the question.
For example: Discuss whether younger workers are always paid less than older workers
Often they are because they are less skilled, lack experience etc.
On the other hand, young workers may be highly trained in new technologies which are driving growth in the tertiary sector and they will be highly paid
Remember to let the infromation in your case study lead the points that you are making in your argument
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