Below are this chapter's featured key terms. The textbook's full glossary is also available for online searching.
| compensating risk premium | the rate at which the worker values a higher level of job safety in terms of the wage; the compensating differential that the worker offers to the labour market before the market wage differential is determined, and is determined by his/her preferences for job safety versus income (see the definition for compensating wage differentials)
|
 |
|
|
| compensating wage differentials | wage differentials designed to compensate a worker for amenities or disamenities associated with a job; positive for undesirable aspects and negative for desirable ones (see the definition for wage differentials)
|
|
|
|
| errors-in-variables problems | a difficulty involved in empirical analysis; an empirical proxy for an economic variable such as job safety does not measure the true variable very accurately
|
|
|
|
| imperfect information | a feature of labour markets in which the attributes of workers and the attributes of firms are unknown at the point of exchange, and are revealed only with the passage of time
|
|
|
|
| isoprofit schedule | the locus of various combinations of the wage level and the job attribute (such as safety) that generate an equal level of profitability for the firm; drawn in wage-job attribute space
|
|
|
|
| market envelope curve | the outermost portions of the group of employers' isoprofit curves; sometimes called the outer shell or the employers' offer curve; represents the maximum compensating wage any employer is willing to pay given a certain level of job safety (see the definition for isoprofit schedule)
|
|
|
|
| omitted variable bias | a difficulty involved in empirical analysis: an economic variable thought to play an important role in determining the values of the endogenous variables (such as wages) is not included in the estimating equation at all
|
|
|
|
| sample selection bias | a difficulty involved in empirical analysis: the estimating sample is not representative of the underlying population whose economic behaviour the researcher wants to investigate; the sample is typically weighted toward workers with fairly extreme patterns of economic behaviour
|
|
|
|
| shadow or implicit prices | the portion of the total market wage associated with a job amenity or disseminate; synonymous with a compensating wage differential
|
|
|
|
| value of life | estimates of the value of a worker's life that only reflect the compensating differential generated by the labour market for a risky job or occupation; represents the price that the market assesses to reduce the risk of death to zero
|
|
|
|
| wage differentials | a difference in the wage levels that arises when workers and jobs are heterogeneous with respect to attributes such as vocation, risk of injury, or working conditions
|
|
|
|
| wage structures | the hierarchy or grid of wage levels relative to each other; a set of wage premiums associated with worker or job attributes such as education, training, and seniority
|
|
|
|
| wage-safety locus | the locus of tendencies between the various isoprofit curves and the indifference curves; generates the equilibrium combinations of the wage and the job attribute (usually job safety) that prevail in the labour market
|
2002 McGraw-Hill Higher Education