Compensation Management - DETERMINANTS OF THE WAGE STRUCTURE - Business Management , undefined for Business Administration. Agra University

Business Administration

Description: Difficulty Of Learning The Job, Seller Anticipates, Conversely, Organizations, Training, Determinants Derived, Constitute, Occupation, Society, Employers, Unions, Semiskilled Members, Discrimination, Industrial Relations Scholars, Employee-Management, Social Determinants, Organizational Determinants, Labour Services, Society, Labour Market Influences, Industrial Unions, Competitive Labour Market, Government Employment, Management Decisions
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Economic Determinants
Adam Smith explains occupational wage dierentials in terms of (1)
hardship, (2) diculty of learning the job, (3) stability of employment, (4)
responsibility of the job, and (5) chance for success or failure in the work.
This is a theory of wage structure. But his standards of worth are equally
useful in explaining the complexity of wage structure decisions. The market
value of an item is the price it brings in a market where demand and supply
are equal. Use value is the value an individual buyer or seller anticipates
through use of the item. Use value obviously varies among individuals and
over time.
Job worth
These two concepts of worth and the concept of internal labour
markets combine to explain important dierences among employers in wage
structure decisions. Organizations with relatively open internal labour
markets (organizations in which most jobs are lled from outside) make
much use of market value. They also make much use of wage and salary
surveys in wage structure decisions.
Conversely, organizations with
relatively closed internal labour markets (most jobs are lled from inside)
emphasize use value. Their analysis of job worth relies more heavily on
perceptions of organization members of the relative value of jobs.
Some other wage structure determinants derived from economic
analysis may be noted. Training requirements of jobs in terms of length,
diculty, and whether the training is provided by society, employers, or
individuals constitute a primary factor in human-capital analysis and thus
job worth. The interaction of ability requirements with training requirements
can yield dierent job values depending on the scarcity of the ability
required and the number of people who try to make it in the occupation and
Employee tastes
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