Why people get paid differing wages

  1. (2 points) Why do people get paid differing wages? What compensating differentials may occur? Give examples.
  2. (2 points) How do unions change the labor market? Give the pros and cons of unions. Do you think they are necessary? Why or why not? Remember to consider unions in conjunction with monopsonies.
  3. (4 points) Watch the following videos: Wealth inequality in motion and How inequality hurts countries. What causes wealth and income inequality? Do you think it is a problem in our current economy? What, if anything should be done about inequality?
  4. (2 points) When would a firm pay higher than equilibrium wages? What might cause a firm to make this decision? What is this wage called?

Why people get paid differing wages

Sample Solution

There are three main theories that e Why people get paid differing wages xist with regards to HR practic Why people get paid differing wages e transfers in MNCs (1) MNCs will follow their common practices despite the country they are in  Why people get paid differing wages due to global homogeneity or ethno Why people get paid differing wages centricity, (2) that they will adjust their policies to the local country (local isomorphism), or as duality theories suggest, the MNC faces conflicting pressures and therefore (3) mix their own practices with that of local practices (Brewster, Wood & Brookes 2008, p. 320) which follows more closely to the contingency model, or model of ‘best fit’ (Khan 2011, p.78). Research suggests that MNCs that incorporate some local responsiveness tend to  Why people get paid differing wages have more success (Caligiuri & Stroh 1995, p. 494). Often, there are many issues that result in the attempt to transfer a HR practice from headquarters to subsidiary branches (Kostova 1999, p. 308). These issues can be categorized as being either intrinsic (ie. structure of the company) or extrinsic (ie. country, culture, legal framework) to the firm (Gamble 2003, p. 370). However, as stated by Ahvik and Björkman (2015, p. 497), “the ability to transfer organizational practices across multiple locations is a potentia Why people get paid differing wagesl source of competitive advantages for multinational corporations (MNCs),” further reiterating the importa Why people get paid differing wages nce of understanding what factors affect HR practice transfers from headquarters to subsidiaries, and to understand the multiple institutional contexts that play a role in the factors that affect HR practice transfers. As stated by Chung, Bozkurt and Sparrow (2012, p. 2333), “the organizational domain of MNCs is characterized by the Why people get paid differing wages  contestation between actors with competing rationalities from multiple institutional contexts such as transnational, home and host national institutions.” In order to expand on these institutional factors and to expand on central debates in the international management literature, convergence vs. divergence theory and home country vs. host-country effect will be discussed nex Why people get paid differing wages t. Convergence vs. Divergence>
There are three main theories that exist with regards to HR practice transfers in MNCs (1) MNCs will follow their common practices despite the country they are in due  Why people get paid differing wages to global homogeneity or ethnocentricity, (2) that they will adjust their policies to the local country (local isomorphism), or as duality theories suggest, the MNC faces conflicting pressures and therefore (3) mix their own practices with that of local practices (Brewster, Wood & Brookes 2008, p. 320) which follows more closely to the contingency model, or model of ‘best fit’ (Khan 2011, p.78). Research suggests that MNCs that incorporate some local responsiveness tend  Why people get paid differing wages to have more success (Caligiuri & Stroh 1995, p. 494). Often, there are many issues that result in the attempt to transfer a HR practice from headquarters to subsidiary branches (Kostova 1999, p. 308). These issues can be categorized as being either intrinsic (ie. structure of the company) or extrinsic (ie. country, culture, legal framewor Why people get paid differing wagesk) to the firm (Gamble 2003, p. 370). However, as stated by Ahvik and Björkman (2015, p. 497), “the ability to transfer organizational practices across multiple locations is a potential source of competitive advantages for multinational corporations (MNCs),” further reiterating the impor Why people get paid differing wages tance of understanding what factors affect HR practice transfers from headquarters to subsidiaries, and to understand the multiple institutional contexts that play a role in the factors that affec Why people get paid differing wagest HR practice transfers. As stated by Chung, Bozkurt and Sparrow (2 Why people get paid differing wages 012, p. 2333), “the organizational domain of MNCs is characterized by the contestation between actors with competing rationalities from multiple institutional contexts such as transnational, home and host national institutions Why people get paid differing wages .” In order to expand on these institutional factors and to expand on central debates in the international management literature, convergence vs. divergence theory and home country vs. host-country effect will be discussed next. Convergence vs. Divergence>

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