The demand for labour for janitors and administrative assistants in elementary schools in Regina is the same at LD= 20 -W.

The demand for labour for janitors and administrative assistants in elementary schools in Regina is the same at LD= 20 -W. However, the supply of labour for janitors in elementary schools is Ls= -1.25 + 0.5W while for administrative assistants the supply of labour is LD= -0.5 + 0.6W.

a ) What are the wage rates for janitors and administrative assistants in elementary schools in Regina?

b) Given the answer in a), is there a 'compensating wage differential' between janitors and administrative assistants in Regina?

Solutions

Expert Solution

b) There is an obvious compensating wage differential of 1.36.

The work of a janitor is considered relatively undesirable when we compare it to that of an administrative assistant. A compensating wage differential is that equalizing difference which makes a person willing and motivated to do the undesirable job. Therefore, in this case, too, the wage differential is acting as a motivating agent.

Rahul Sunny answered 2 years ago

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