Wage Differentials | Economics for GCSE/IGCSE - Year 11 PDF Download

Reasons for Differences in Pay

Workers are paid different amounts (wage differentials) due to a number of factors, including:

• Gender pay differences
• Industrial sector pay differences
• Private & public sector pay differences
• Differences in pay between skilled & unskilled workers

Reasons for Wage Differentials Between Men & Women

• Men typically engage in full-time employment, while women often opt for part-time roles to balance work and childcare responsibilities.
• Men commonly experience continuous career progression, whereas women frequently pause their careers for family obligations, missing chances for career growth.
• Women are more inclined to accept jobs below their skill level to accommodate childcare duties.
• The gender pay gap represents a discriminatory practice where women receive lower pay than men for the same job.

Reasons for Wage Differentials in the Primary, Secondary & Tertiary Sectors

• Primary Sector: Workers in the primary sector typically receive lower wages due to the basic skill requirements of their jobs. Profits from raw materials are generally minimal within the production chain.
• Secondary Sector: Employees in the secondary sector enhance the value of raw materials, leading to higher profits from the sale of products. Consequently, wages in this sector are usually higher than those in the primary sector.
• Tertiary Sector: Workers in the tertiary sector command the highest wages. Their roles demand specialized skills that necessitate years of training. The goods or services they offer are often intricate and expensive, such as those provided by artificial intelligence developers.

Reasons for Wage Differentials Between Private & Public Sector Workers

• Public Sector: Entities in the public sector are owned and overseen by the government.
• Private Sector: Private sector establishments are owned and managed by private individuals or companies.

Reasons for Wage Disparities Between Private and Public Sectors

Reasons for Wage Differentials Between Skilled & Unskilled Workers

• Many economies feature a surplus of unskilled labor, leading to a situation where employers can drive wages down due to the availability of workers willing to accept lower pay rates.
• Acquiring specialized skills requires significant investments of time and money, resulting in a limited supply of specific skill sets. Consequently, wages for skilled workers are typically higher.