Chapter Outline

14.1 Wage Differentials

14.2 Labour Unions

14.3 Income Inequality

AFTER STUDYING THIS CHAPTER YOU WILL BE ABLE TO

The competitive theory of factor-price determination, presented in
Chapter 13 , tells us a great deal about the determinants of factor

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 Learning Objectives (LO)

1. explain wage differentials in both competitive and non-

competitive labour markets.

2. analyze the possible effects of legislated minimum wages.

3. examine the tradeoff unions usually face between wages and

employment.

4. understand some possible explanations for the recent trend

toward rising income inequality.

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