What four factors contribute to differences in wages?
- workers according to the level and type of skills they have. The more skills they have - the greater productivity will be, and therefore the benefit for the employer.
Skills depend on education, training and experience, but on creativity, intelligence, abilities, rationality and wisdom in a given situation as well.
- the tougher they are, the bigger the wage will or has to be, as a compensation. On contrary, some very pleasant working conditions may be frugally paid because they offer conformity instead of the (high) salary.
- a shameful situation where someone is paid less for the same job because of a factor different from productivity, such as gender, race, ethnicity, looks etc. In U.S., a few laws were passed more than half a century ago to stop such practice.
- are taken when it is considered that market does not function to benefit from the general public. One of such actions is an establishment of a - to help low income workers, no matter if it is disturbing the free market system and equilibrium wage.