Focus on Wage Differentials in Selected Countries: Financial Management Analysis
M. R. K. Swamy
Om Sai Ram Centre for Financial Management Research
Journal of Financial Management and Analysis, Vol. 20, No. 2, July-December 2007
While it is true that 'Organization Revolution' (marked by high-level technological sophistication and requiring high-academically qualified technical manpower with labour mix 50 engineers - 10 technicians - 5 craftsmen has led to widening wage differentials, data published by U.S. Census Bureau show that the bulk of new net jobs generated by firms with less than 20 employees (i.e., small firms) stems mainly from relatively large gross job losses among large firms - not from massive job creation by small firms. Large firms pay higher wages than small firms -in 2005, the average hourly wage in small firms (100 workers and <) was US$ 15.69 and US$ 27.05 hourly wage in large firms (2500 workers and >) workers doing the same job might be willing to accept a lower wage for increased job stability, better fringe benefits or other positive job attributes. Women and minorities earn less than their white (caucasoid) male counterparts in the U.S.A. On the other hand, 75 per cent of business establishments in the U.S.A. represent the self-employed having no payroll at all.
Developed countries like the U.S.A. by taking advantage of low cost-cum-hi-tech manpower availability in the developing countries, have ventured into employing them on dismally low ages. Paradoxically, engineers from advanced developing countries are employed in the less advanced developing countries on differential wages based on nationality, race, religion, etc. considerations reducing their salary status to a technical level - Thanks to the high exchange value for the currencies of the oil rich countries which provide the incentive. The author after thorough research has come out with the unique Labour Command Theory of Wage Differentials.
Keywords: Organization Revolution, Unjustified wage differentials, Labour Command Theory
JEL Classification: J31, J41, O51, O55Accepted Paper Series
Date posted: March 5, 2008
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