Question

What are the factors that affect pay differentials? How does each factor increase or decrease relative wages?

Explain how discrimination can cause pay differentials between men and women in similar occupations. Explain how factors other than discrimination could affect relative wages.

Answer 1

Pay differential is affected by

Years of experience of the candidate

There are a number of factors which contribute to the pay differentials. These factors are discussed as below:-

Years of experience of the candidate:- Greater the experience of working on a job, higher will be the salary or compensation received. Thus if a person has several years of working experience that he will be receiving greater compensation than a fresher. This differential exists mainly due to the fact that an experienced candidate has better knowledge of working in the various situation, can manage the operation efficiently and can withstand the working pressure well.

Education of the candidate
The professional and educational background of the candidate also plays an important role in the overall compensation scale. If the candidate has higher degrees, good educational records, certifications, then there are greater chances that he would receive good compensation.

Professional Reviews and Work profile of the candidate
Higher pay scales can also be obtained if the person has a good review from his or her previous employers

Discrimination has a large role in deciding the pay scale in an organization. Such as a woman gets lower pay for the same job in comparison to men. Although laws have been made in this regard it still exits in many parts of the world. Some other kinds of discrimination like color, caste, and creed also affect the pay scale of the candidates.