1. taking into account labour productivity, education and jobconditions, outline

Question

1. taking into account labour productivity, education and jobconditions, outline some of the problems that would arise if allworkers in the canadian economy recieved a uniform wage. 2.in 1996, chief executives of CND cooperations recievedaverage annual earnings of over $500 000, with a third of thisamount tied to the performance the companies they managed. Whateconomic arguments can be made for and against such high averageearnings? thanks for the help, feel free to write point form if youwant 1. taking into account labour productivity, education and jobconditions, outline some of the problems that would arise if allworkers in the canadian economy recieved a uniform wage. 2.in 1996, chief executives of CND cooperations recievedaverage annual earnings of over $500 000, with a third of thisamount tied to the performance the companies they managed. Whateconomic arguments can be made for and against such high averageearnings? thanks for the help, feel free to write point form if youwant

Explanation / Answer

Oddly enough, Adam Smith's discussion of this point in chapter10 of Wealth of Nations is still the basic model professionaleconomists use for discussing wage variation (it's called thetheory of compensating differentials). . Ask yourself the following questions:    If doctors didn't make more money than clerks,why would anyone (or enough anyones, at least!) go to medicalschool?    If toxic waste handlers didn't make more moneythan fast food workers, why would anyone agree to haul toxicwaste? . An issue less relevant for Smith has to do withincentives. If my job pays the same as any other job, whyshould I bother to work hard? If they fire me, I can getanother job with the same wages. This issue is also relevantfor the CEO question. . Finally, regarding your CEO question, see if your textbookdiscusses something called a "tournament model" for incentivizinglower-ranking workers. (It might not; this is a common butnot universal topic.)

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