The following important factors are responsible for the differences in wages between occupations.
1. Difference in efficiency:
All persons are not equally efficient. They differ in abilities. Some are more efficient and some are less efficient. Some others are not efficient at all. An efficient worker gives better output. Hence, he is paid higher wages than others are. Moreover, the efficiency requirement in different jobs varies. A doctor requires more skill than a nurse does. A district collector is entrusted with heavy responsibilities and the job necessitates ability and intelligence. On the contrary, the job of a sweeper does not require them. Hence, wages differ between occupations.
2. Presence of noncompeting groups:
Society is divided into a number of working groups, which are noncompeting. Caste system creates such groups in India. As a result, a child born to a sweeper will most likely be a sweeper just as a black smith’s son will be a black smith. Besides, the chances of receiving training for better-paid occupations depend on the resources of the family. Thus, in heritance, environment, training and sex are some factors, which create noncompeting groups in the society. Hence, workers belonging to different groups are paid at different wage rates.
3. Immobility of labour:
Labour is not perfectly mobile. It is normally shy to move. It has an inertia to stick to one job. Sometimes, people are not prepared to accept higher wages if it necessitates a change of place. This accounts for difference in wage in different places. The presence of noncompeting groups in society makes labour more immobile. Political barriers against the free movement of labour from one country to another result in the difference in wages in different countries.
4. Nature of employment:
The nature of work also influences wage rates. Dangerous and disagreeable work brings higher money wages to attract larger supply of labour. For example, a coal miner gets higher wages than a clerk in the office. High money wages act as compensation. Contrarily, safe, pleasant, comfortable and socially prestigious jobs carry lower money wages.
5. Training and Qualification:
Jobs requiring special qualification and apprenticeship generally command higher wages than jobs learnt easily and for which no special training is required.
This differs in different occupations. The Cobbler’s job is not as productive as that of a skilled motor mechanic or of clerk as that of a principal of a college.
7. Regularity of employment:
If there is regular employment in a job, one may demand lower wages. If the job is irregular or seasonal, wage has to be higher. In case of India, young men prefer low paid jobs under government due to security and regularity of employment to irregular and insecure private jobs with more remuneration.
8. Future Prospects:
There are some jobs where promotion prospects are better than other jobs. Even if initial salary is low, if promotion prospects are there people prefer these jobs to others jobs.
9. Scope for extra earning:
If a job has scope for extra earnings, the regular wage may be lower. A doctor may start with a lower salary than a lecturer but the former can make up the deficiency by private practice.