In economics, there is a presumption that people will migrate to higher paying jobs from lower paying jobs of the same type and with the same requirements. However, this can only happen if people know about the jobs.

1. Wage Differentials Due To Market Imperfections
Compensation Management

2. Prepared By
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Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com

3. Wage differentials
• The wage paid to workers
varies greatly. These wage
differentials are mostly the
result of differences in
worker ability and the
workers' effort in performing
the job.

4. Wage differentials
• There are also wage
differentials across
occupations, because of
differences in the demand
and supply of laborers for
particular job or occupation.
These differences arise
primarily because of
differences in the amount of
education or training
required and in the
desirability of the job itself.

5. Wage Differentials Due To Market
Imperfections
• In economics, there is a
presumption that people will
migrate to higher paying
jobs from lower paying jobs
of the same type and with
the same requirements.
However, this can only
happen if people know
about the jobs.

6. Wage Differentials Due To Market
Imperfections
• People tend to look for jobs
in their own locality by
searching the local
newspaper or local Internet
listings. Moreover, many
people get jobs from their
network of friends and
acquaintances, who tend to
live in the same area.

7. Wage Differentials Due To Market
Imperfections
• Hence, the lack of
information can lead to
persistent differences in
wage differentials for the
same type of job.