- #1
gangsta316
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Explain why, in a perfectly competitive labor market, the total net advantages of all occupations would be equalized. (10)
In a perfectly competitive labor market, all workers have the same wage. So if they have the same wage how can net advantages be equalized? Jobs which have bad working conditions will pay the same as jobs with good working conditions. My reasoning is this: if say, lawyers earn more than builders, then builders will change their occupation to lawyer (perfect labor mobility) and the extra supply of lawyers will lower the wage rate and the lower supply of builders will increase the wage rate. This happens with all occupations and eventually all workers have the same wage rate. And isn't the whole principle of perfect competition that everyone is a price taker?
Thanks for any help.
In a perfectly competitive labor market, all workers have the same wage. So if they have the same wage how can net advantages be equalized? Jobs which have bad working conditions will pay the same as jobs with good working conditions. My reasoning is this: if say, lawyers earn more than builders, then builders will change their occupation to lawyer (perfect labor mobility) and the extra supply of lawyers will lower the wage rate and the lower supply of builders will increase the wage rate. This happens with all occupations and eventually all workers have the same wage rate. And isn't the whole principle of perfect competition that everyone is a price taker?
Thanks for any help.