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Job rate changes: A theoretical and empirical analysis.

  • Design


The firm's internal occupational wage differentials and their possible causes are here examined, by means of theoretical analysis and of empirical investigation. The theoretical analysis suggests labor market pressures and wage expectations as principal external causes for such differentials, with efficient labor force utilization as the principal internal consideration. The empirical study, however, indicates that the principle of efficient factor utilization was not valid for the internal rate ranges examined. That is to say, rate changes do not directly correspond to increases in employee productivity, with junior employees appearing to receive lower wages than their marginal contribution would seem to warrant. This is explained in terms of a hiring and wage policy designed to keep the marginal revenue product of the labor factor equal to the average range rate. Given high turn-over among junior employees, the firm's wage policy emerges as a rational one. (Author's abstract courtesy EBSCO.)

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