Chapter Learning Objectives

  • Understand the economic forces that allocate workers across different occupations and industries.
  • Explain the law of one price.
  • Understand how payroll taxes and employment subsidies affect the labor market.
  • Recognize the mechanism that leads to compensating wage differentials for those who endure onerous working conditions.
  • Recognize the fundamental principle that governs the payment of fringe benefits and be able to explain some of the econometric difficulties that arise in testing the framework.