Paper 3 · labour markets and wage differentials
Which theory of wage differentials explains that a worker's wage reflects the value of their marginal contribution to a firm's output?
ACompensating wage differentials theory
BHuman capital theory
CMarginal productivity theory
DMonopsony theory
Explanation: Marginal productivity theory holds that in a competitive labour market a worker is paid a wage equal to the value of their marginal product, so differences in productivity across workers and occupations translate directly into wage differentials.
Derived from ZIMSEC Economics Paper 3, June 2006, Q5
