The Structure of Wages in Latin American Manufacturing Industries

By Jorge Salazar-Carrillo; Juan J. Buttari et al. | Go to book overview

Chapter 2. The basic conceptual and methodological framework

When examining quantitative results in later chapters, plausible explanations relying on fundamental concepts of marginal productivity wage theory and institutional factors will be frequently offered. Given the pioneering character of this study, the nature of the analytical comments should be made clear early in the work. These comments will be essentially interpretive and will often reflect educated conjecture relating to variables influencing the empirical findings. The lack of in-depth studies on specific labor markets (referred to in the previous chapter) makes a different approach not yet feasible.

In interpreting the quantitative results, three basic assumptions of marginal productivity theory will be employed: the rationality of employers and workers; the employer's desire to maximize net returns from factor inputs; and employees' aspiration to maximize the utility derived from their labor services. As is well known, from these assumptions the main principles of the theory are derived: (1) an employer will hire an extra unit of labor as long as the revenue from its marginal product is greater than or equal to its marginal cost; (2) an employee will provide additional labor services as long as the wage rate is greater than or equal to the marginal rate of substitution of income for leisure;1 (3) equilibrium will be reached when marginal revenue produced is equal to marginal labor cost and when the wage rate is equal to the income-leisure marginal substitution rate.

Likewise applied will be the knowledge that under the Robinson-Chamberlain conditions varying product and factor market combinations will produce diverse wage rates and employment levels. Once a framework of different combinations of product and factor market situations is established and different types of labor factors are specified, the presence of wage differentials follows by implication, even under equilibrium conditions.2

____________________
1
The marginal rate of substitution is the number of units of a good a person is willing to give up to obtain an additional unit of another good.
2
See Lloyd Reynolds, "Wage Differences in Local Labor Markets," "American Economic"

-6-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
The Structure of Wages in Latin American Manufacturing Industries
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 174

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.