#### Question

What four factors contribute to differences in wages?

#### Solution

Verified

$\text{\underline{Four factors that contribute to differences in wages}}$ are:

$\textbf{1. Human Capital}$ - 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.

$\textbf{2. Working Conditions}$ - 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.

$\textbf{3. Discrimination}$ - 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.

$\textbf{4. Government Actions}$ - 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 $\textbf{minimum wage}$ - to help low income workers, no matter if it is disturbing the free market system and equilibrium wage.

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