Wage dispersion
Encyclopedia
Wage dispersion is an economic term which refers to the amount of variation in wage
s encountered in an economy.
does. This is due to the fact the US are dealing with competition from abroad in a different way; they allowed the wages of lower-skilled workers to fall relative to those of highly skilled ones (under the premise of keeping some of the jobs that might have been outsourced
). Europe, however, maintained a somewhat higher level of wages, without suffering the high unemployment that blights the US. In Europe, higher base wages, not to mention rigid labour market regulations, such as the restrictions on laying off workers, and powerful trade union
s, make hiring an employee a long-term investment in Europe - Not so in the US.
Wage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...
s encountered in an economy.
Wage dispersion in the US and Europe
European countries have in general much less wage dispersion than the U.S.United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
does. This is due to the fact the US are dealing with competition from abroad in a different way; they allowed the wages of lower-skilled workers to fall relative to those of highly skilled ones (under the premise of keeping some of the jobs that might have been outsourced
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
). Europe, however, maintained a somewhat higher level of wages, without suffering the high unemployment that blights the US. In Europe, higher base wages, not to mention rigid labour market regulations, such as the restrictions on laying off workers, and powerful trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
s, make hiring an employee a long-term investment in Europe - Not so in the US.
Books
- Dale T. Mortensen (2005), Wage Dispersion: Why Are Similar Workers Paid Differently?, MIT Press. ISBN 0-262-63319-1