Practise explaining shifts in labour demand and supply, wage differentials and changing employment outcomes using labour-market diagrams and contexts.
In 2023 the highest-paid lawyers in Switzerland earned, on average, three times more than the lowest-paid lawyers.
Evaluate possible reasons for wage differentials in an occupation of your choice.
Illustrate your answer with an appropriate diagram(s).
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the general marking guidance. The indicative content below exemplifies some of the points that candidates may make, but this does not imply that any of these must be included. Other relevant points must also be credited.
Quantitative skills assessed:
QS4: Construct and interpret a range of standard graphical forms.
QS9: Interpret, apply and analyse information in written, graphical, tabular and numerical forms.
- Level of skill and education, as lawyers with specialised skills, experience or higher levels of education receive higher wages because of scarcity of labour or higher productivity of the workers
- If the demand for a particular skill set is high relative to the supply, then the wage rate is likely to be higher than if demand is low relative to the supply
- Elasticity of demand for labour, the more elastic and substitutable the labour is the lower the wage rate. If labour cannot be replaced by capital the demand for labour is more inelastic and the wage rate is likely to be higher
- If the supply of labour is inelastic e.g. if high qualifications or extensive experience is required then the wage rate is likely to be higher than if supply of labour is elastic
- Job characteristics and working conditions - if the job requires high levels of physical demands/high-risk level/ poor working conditions, the business may need to pay higher wages to encourage individuals to work in the occupation. Higher-paid lawyers may be required to work much longer hours or be under more stress than lower paid lawyers
- Labour market discrimination could be based on biases in accessing higher-paying jobs or receiving equal pay e.g. gender, race, age
- Higher living costs in certain areas such as Geneva may lead to higher wages to attract workers, while lower living costs in other areas of Switzerland may result in lower wages
- Legislation e.g. different minimum wage rates for workers of different ages
- Contractual status/Trade union membership may influence the wage paid to different groups for identical work
- Greater degree of monopsony power may allow firms to reduce pay rates in certain geographical areas compared to more competitive labour markets
- Public vs private sector wages
NB: If no diagram candidate can achieve a maximum of level 3 Maximum of level 3 if no reference to an industry
Accept other labour market diagrams if they illustrate differences in wage rates
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Displays isolated, superficial or imprecise knowledge and understanding of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate examples.
Descriptive approach which has no chains of reasoning.
Level 2
4-6
Displays elements of knowledge and understanding of economic terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic problems in context.
A narrow response or superficial, only two-stage chains of reasoning in terms of cause and/or consequence.
Level 3
7-9
Demonstrates accurate knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the question. Some evidence and contextual references are evident in the answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause and/or consequence are evident but they may not be developed fully or some stages are omitted.
Level 4
10-12
Demonstrates accurate and precise knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using appropriate examples which are fully integrated to address the broad elements of the question.
Analysis is clear, coherent, relevant and focused. The answer demonstrates logical and multi-stage chains of reasoning in terms of cause and/or consequence.
Evaluation (8 marks) - indicative content
- Prioritisation of reasons for wage differentials
- Anti-discrimination laws might limit the size of wage differentials in an occupation
- Paternity leave would cause men to also have gaps in their work, making the pay more equal between men and women
- Government Policies: Government regulations, such as minimum/maximum wage laws, can influence wage differentials by setting a floor/ceiling on wages or affecting the take-home pay of workers
- Trade unions may bargain for higher wages for lower-paid employees reducing the wage differential
- Significance of reasons changes over time
- Combination of reasons contribute to wage differentials
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2
4-6
Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3
7-8
Evaluation recognises different viewpoints and/or is critical of the evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.