Question

What characterizes a winner-take-all labor market? Offer some reasons why corporate heads now earn much more than they did in the 1970s.

Answer 1

Answer:-

Winner-take-all labor markets are those in which a few key individuals critical to the overall success of the enterprise are richly rewarded. Corporate heads now earn relatively more because successful products can be sold across the country and around the world, firms now compete more for top executives rather than hiring from within the company, and Americans are more accepting of wide pay differences than are others.

Reasons for increasing income of corporate leads:-

In the recent years, the top leaders of the corporate earn multiple times more than the last decades. The reason for this increasing income is given below:

• The American economy is growing speedily by increasing their share of the market around the world. This, in turn, increases the marginal productivity of the corporate leaders.

• The supply of corporate leaders is lower than the demand for them. Since the demand is higher, corporates are paying a higher salary to them.

• To attract the top executives of competing firms, corporates offer a higher salary to the executives.