CAIE A-Level Economics 8.3.9 Wage Differentials

CAIE A-Level Economics 8.3.9 Wage Differentials
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise explaining wage differentials through labour demand, MRP, skill scarcity, mobility, training and non-pecuniary advantages while distinguishing nominal from real pay.

How this is tested

  • compare labour demand using productivity, output value and MRP across occupations
  • compare labour supply using skills, training, mobility and non-pecuniary job advantages
  • distinguish money wages from real wages by adjusting for the purchasing power of prices

Question 3

[Maximum number: 20]

The average wage of chief executives in large companies in a country is over 100 times greater than the average wage of their employees.

Assess how economic theory can account for this variation in average wages.

Section C

Answer one question.

EITHER